2-A sustainable food supply chains perspective

Int. J.
Production Economics ∎ (∎∎∎∎) ∎∎∎–∎∎∎
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Int. J. Production Economics

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Critical factors for sub-supplier management: A sustainable food

supply chains perspective
Jörg H. Grimm a, Joerg S. Hofstetter a, Joseph Sarkis b,n
a
University of St.Gallen, Dufourstrasse 40a, 9000 St.Gallen, Switzerland
b
School of Business, Worcester Polytechnic Institute, 100 Institute Road, Worcester, MA 01609-2280, USA
art ic l e i nf o a b s t r a c t
Article history: The food industry and its supply chains have significant sustainability implications. Effective supply chain
Received 21 December 2012 management requires careful consideration of multiple tiers of partners, especially with respect to
Accepted 9 December 2013 sustainability issues. Firms increasingly approach their sub-suppliers to drive compliance with social and
environmental efforts. A number of complexities and unique challenges make sub-supplier management
Keywords: more difficult than direct supplier management, e.g. a lack of contractual relationships to sub-suppliers,
Sub-supplier management few opportunities to put direct pressure on sub-suppliers, or lack of transparency concerning sub-
Sustainable supply chain management suppliers' involvement in a focal firm's supply chains. The literature has not investigated, either from
Corporate sustainability standards sustainability or other perspectives, the critical success factors (CSFs) for firms' sub-supplier manage-
Theory of critical success factors
ment. Therefore, this study seeks to explore and increase understanding of critical factors that help to
Field study
overcome the complexities and unique challenges of sub-supplier management, with a focus on the food
Food industry
industry. Using data and information from a year-long field study in two food supply chains, the research
identified 14 CSFs that influence the success of sub-suppliers' compliance with corporate sustainability
standards (CSS). The identified CSFs can be classified into (1) focal firm-related, (2) relationship-related,
(3) supply chain partner-related, and (4) context-related CSFs. The present research expands on the
theory of critical success factors by applying the theory to the sustainability and sub-supplier manage-
ment context. In support of critical success theory, it was found that CSFs do exist and their management
will be necessary for effective sub-supplier management success as highlighted and exemplified by field
study insights from practitioners. Multiple research avenues are necessary for further evaluation of sub-
supplier management in the food industry and other industries who may find similar issues that arose
from the food industry.
& 2014 Published by Elsevier B.V.
1. Introduction demonstrated how firms' brands can suffer from non-compliant

sub-suppliers (Barnett and King, 2008; Choi and Linton, 2011;
Firms increasingly face pressure from external stakeholders Wagner et al., 2009).
(e.g. NGOs, customers, regulators) to maintain sustainable supply Sustainable supply chain management (SSCM) comprises the
chains. Focal firms, buyers, are required to take responsibility of “management of material, information and capital flows as well as
their suppliers ensuring the actions of their supply chain in a cooperation among companies along the supply chain while
sustainable manner. Oftentimes, external stakeholders do not taking goals of all three dimensions of sustainable development,
differentiate the behavior of the focal firm from its suppliers and i.e. economic, environmental and social, into account which are
hold the focal firm responsible for all activities within product derived from customer and stakeholder requirements” (Seuring
manufacture (Rao, 2002; Koplin et al., 2007). Any party in the and Mueller, 2008b, p. 1700). Past SSCM research has extensively
supply chain not complying with the focal firm's corporate discussed the management of direct suppliers' sustainability
sustainability standards (CSS) can potentially damage corporate performance, but little research has shed light beyond the first-
reputation and/or harm customer confidence. Mattel (Barbie), Nike tier supplier level, neglecting sub-suppliers' relationships, roles,
(Football) and Nestlé (Kit Kat) are prominent examples that and activities.
This research takes a multifaceted perspective of evaluating
n
how to ensure CSS adoption and diffusion through the supply
Corresponding author. Tel.: þ 1 508 831 4831.
E-mail addresses: [email protected] (J.H. Grimm),
chain. CSS expresses an organization's social and environmental
[email protected] (J.S. Hofstetter), sustainability commitment, which commonly exceeds regulatory
[email protected] (J. Sarkis). requirements (Bansal and Hunter, 2003; Barnett and King, 2008).
0925-5273/$ - see front matter & 2014 Published by Elsevier B.V.

http://dx.doi.org/10.1016/j.ijpe.2013.12.011
Please cite this article as: Grimm, J.H., et al., Critical factors for sub-supplier management: A sustainable food supply chains perspective.
International Journal of Production Economics (2014), http://dx.doi.org/10.1016/j.ijpe.2013.12.011i
2 J.H. Grimm et al. / Int. J. Production Economics ∎ (∎∎∎∎) ∎∎∎–∎∎∎
Although this research emphasizes efforts in the food supply Research has not comprehensively addressed what enables or
chain, this study sets the stage for investigation into general hinders the management of sub-suppliers, in any industry, much
sub-supplier supply chain management. less the food industry (Lee, 2008; Seuring and Mueller, 2008b;
The sub-supplier management literature highlights how focal Fawcett and Magnan, 2002; Millington, 2008). Focal firms require
firms may apply managerial practices to sub-suppliers to increase assistance on identifying and ultimately influencing factors, which
a sub-supplier's level of CSS compliance. These sub-supplier lead them to successfully implement CSS at sub-suppliers. Conse-
management practices can be classified into the two dimensions: quently, our guiding research questions are:
assessment (e.g. informal site visits, audits) and collaboration (e.g.
trainings, workshops, corrective action plans), having similar (1) What are the critical success factors (CSFs) for the management
characteristics to those applied to direct suppliers (Vachon and of sub-suppliers to ensure their compliance with corporate
Klassen, 2006, 2008; Klassen and Vachon, 2003). However, a lack sustainability standards in food supply chains?
of contractual relationships with sub-suppliers, inability to put (2) What are the perspectives of various players in food supply chains
direct pressure on sub-suppliers, and incomplete knowledge about related to these CSFs?
the existence and level of involved sub-suppliers in a focal firms' (3) What research needs to be completed to more fully address and
supply chain reflect some challenges that make managing sub- build on this important research concern?
suppliers unique (Choi and Linton, 2011). Given that the food
industry and its supply chains have significant sustainability To address these research questions, the remainder of this
implications (Yakovleva et al., 2012; Roth et al., 2008), their paper is organized as follows: Firstly, a literature review on
concerns are an especially sensitive, timely and important focus. managing sub-suppliers for sustainable (food) supply chains and
When compared to other industries, food supply chains have critical factors is provided. Secondly, theoretically positioning this
some unique characteristics. Food supply chains can be distin- work within the critical success factors theoretic lens, the present
guished into “fresh agricultural products” (e.g. vegetables or fruits) research aims for the identification of CSFs, seeking to extend the
and “processed food products” (e.g. convenience food or soft theory of critical success factors to supply chain management in
drinks) (Apaiaha et al., 2006). Resulting product-related issues general and SSCM for food supply chains in particular. Thirdly, the
include but are not limited to “shelf life constraints, variability of exploratory field study methodology is presented. Fourthly, the
quality and quantity of supply of farm-based inputs, variable results section describes the identified CSFs for the management
process yield in quantity and quality due to biological variations, of sub-suppliers with linkages to field study empirical evidence
seasonality, random factors connected with weather and pests and that results from two multi-tier supply chains in the food industry.
other biological hazards” (Van der Vorst et al., 2002, p. 124). Avenues for further research are proposed throughout. This paper
Stakeholders and consumer concerns have also increased atten- ends with a discussion on research findings, and a provision of
tion for food safety in the food supply chain as well as for managerial implications guiding managers who seek to approach
environmental and social issues. Efforts have consequently been issues beyond the tier-1 supplier level, especially from a sustain-
intensified to enable tracking and tracing of materials and ingre- ability perspective in the food supply chain.
dients in food supply chains. For example, food safety and The theoretical contribution of this work includes the use of the
traceability standards by the European Union (EU) requiring every critical success factors theoretical lens to understand the issues
ingredient to be traceable (EU, 2002). In developing countries such facing complexity of managing sub-suppliers from a sustainability
as China, various food scandals, such as baby milk formula and pet perspective. From an academic perspective, the identified CSFs can
foods, have also caused serious safety and environmental concerns prove useful for scale development and broader research investi-
(Mu and Jia, 2013). gation on the role these CSFs have on other organizational
Although food products often have relatively simple bills of practices and performance. Practically, the identification of specific
materials (ingredients) (Kehoe and Boughton, 2001), food supply CSFs can be used as a guideline by the food industry, and other
chains typically comprise a large variety of different supply chain industries, to help manage their relationships across multiple tiers
partners such as retailers, wholesalers/distributors, various tra- of suppliers.
ders, processors, marketers/storage, farmers or farm suppliers that
increase complexity and decrease transparency (Roth et al., 2008).
In the food industry a recognizable amount of ingredients are 2. Literature review
commoditized or processed as bulk cargo that makes traceability
more difficult (Hamprecht et al., 2005). Given the geographical In this section, the sustainable supply chain management
restriction for agricultural cultivation and depending on the (SSCM) literature is reviewed to provide some foundation for
consumer market destinations, product flows span great geogra- understanding interactions with sub-suppliers. The review is
phical distances. Although business relationships in food supply consequently extended to critical factors that either reflect barriers
chains are mostly dyadic, sustainability, certification, and trace- or enabled engagement in SSCM, potentially targeting CSFs for
ability issues are more evident and increasingly require firms to sub-supplier management. Due to the immaturity of the field with
interact with sub-suppliers in these supply chains (Mena et al., respect to managing sub-suppliers and respective CSFs, the review
2013; Tran et al., 2013). is not limited to food supply chains and initially considers the
For many sustainability standards supplier's or sub-supplier's entire body of SSCM. Sustainable food supply chain idiosyncrasies
compliance can only be assessed at the respective production site, are highlighted in the review.
source, or farm (e.g. fair salaries or pollution). For traditional
supply chain objectives (e.g. availability, quality, or price), perfor- 2.1. Sub-suppliers in sustainable supply chain management
mance can be measured also at stages after products leave the
production site, e.g. at the interface between the focal firm and the SSCM literature has extensively investigated managerial prac-
direct suppliers (Koplin et al., 2007). In that case, there is less need tices and relationships between focal firms and their direct
to become deeply involved with suppliers' and sub-suppliers' suppliers (Brammer et al., 2011; Bai and Sarkis, 2010a). These
practices at the respective production sites. Less transparency is relationship practices have been classified into two dimensions:
needed, less specific elements to business practices, and also assessment and collaboration (Vachon and Klassen, 2006, 2008;
fewer, if any, cultural changes are required. Klassen and Vachon, 2003).
J.H. Grimm et al. / Int. J. Production Economics ∎ (∎∎∎∎) ∎∎∎–∎∎∎ 3
Assessment practices enable the firm to evaluate suppliers' approved “sub-suppliers lists”, which dictate a firm's direct sup-
sustainability performance and give an indication about the level pliers from which supplier (i.e. sub-supplier) they must source,
of compliance with a firm's CSS. During an initial contracting/ could clear a hurdle (Choi and Linton, 2011), but specific control or
tendering phase, firms may apply defined sustainability criteria in collaboration at these lower tier levels is very difficult to manage.
order to select “capable” suppliers initially and to reduce the risk The relational complexity of managing sub-suppliers just leads
that these suppliers do not comply with the firms' CSS (Reuter many firms to rely on their direct suppliers to manage their sub-
et al., 2010; Foerstl et al., 2010). Firms increasingly request suppliers (Lee and Klassen, 2008; Spence and Bourlakis, 2009;
certifications by suppliers in these early stages, proving that Gonzalez et al., 2008).
suppliers fulfill social or environmental requirements (Delmas Although some literature describes managerial practices with
and Montiel, 2009). Conducting audits allows an in-depth assess- respect to sub-suppliers, there is little knowledge about what aids
ment of supplier sites and processes and consequently the focal firm success in managing these sub-suppliers. To identify
identification of non-compliance with CSS (Boyd et al., 2007; potential insights into this issue, the literature review is conse-
Darnall et al., 2009; Teuscher et al., 2006). Supplier monitoring quently extended to examine critical factors for SSCM in general.
serves as a continuous assessment approach to observe suppliers'
sustainability performance (Brammer et al., 2011). 2.2. Critical factors to sustainable supply chain management
Collaboration practices are typically more supportive activities
that seek to improve the relationships or practices between the Starting with a broad focus on sustainable supply chains, the
buyer and supplier. Therefore, firms may implement supplier reviewed literature refers to food supply chains as well as to
development programs in which collaborative activities such as supply chains in other industries. However, food supply chain
training, workshops, or employee transfers are applied in order to idiosyncrasies are highlighted in this section. Commonly, critical
develop suppliers' CSS identified capabilities (Bai and Sarkis, SSCM factors may be classified into internal or external enablers
2010a, 2010b). and barriers (Walker et al., 2008). Table 1 summarizes critical
Despite the large body of literature on “traditional” supplier factors that were identified in the literature.
management, relatively minimal research has addressed the
challenge of managing suppliers beyond the tier-1 level, which
in this paper is referred to as sub-suppliers (Lee, 2008; Millington, 2.2.1. Internal critical factors
2008; Seuring and Mueller, 2008b). Past research has typically Many firms struggle to engage in SSCM due to high costs and a
mentioned sub-suppliers as an aside. The existent literature lack of financial resources. SSCM practices such as conducting
does indicate that focal firms can generally manage and approach audits or running supplier development programs are costly and
sub-suppliers with similar practices of traditional supplier man- time consuming. Typically a small proportion of the entire supply
agement. Practically, Hewlett-Packard (HP) operates dedicated base might be covered by SSCM practices (Kolk and Tulder, 2002;
sub-supplier initiatives in which comprehensive assessment Ciliberti et al., 2008). Cost efficiency pressures might lead to cost
(e.g. sub-suppler site visits and audits) and collaboration practices cutting in SSCM before other operations are affected. Despite
(e.g. trainings and workshops) with HP's sub-suppliers take place difficulties of defining scope and evaluating the return-on-
(DCCA, 2008). Examples also include focal firms gathering infor- investment and reluctance to invest in SSCM, firms might seek to
mation from suppliers and sub-suppliers to map their supply chain explicitly outline the business case of SSCM (Ageron et al., 2012;
partners for the identification of hidden sustainability risks (Boyd Walker et al., 2008; Peters et al., 2011).
et al., 2007) or to assess carbon emissions for their multi-tier Beside costs and financial factors, personnel related factors
supply chain (Wolf, 2011). such as competences, skills (Bowen et al., 2001), and commitment
In food supply chain research Hamprecht et al. (2005) report on (Cooper et al., 2000; Walker et al., 2008) play a major role in the
how a global food manufacturer made use of control points of the failure or success of a firm's SSCM initiative. Thus, firms need to
food safety systems to trace back material flows to agricultural assure that their personnel receive required training and build up
production. The increased transparency gave the food manufac- the necessary competences and skills to address sustainability
turer the opportunity to evaluate risky suppliers concerning their factors and to understand how these factors are embedded within
sustainability performance. In the food supply chain research tool supply chains (Bowen et al., 2001; Carter and Dresner, 2001).
development such as benchmarking tools for multiple of sustain- Top management support further ensures commitment and
able food supply chain stages has been addressed (Yakovleva et al., resources for effective implementation of organizational SSCM
2012), and focused on various partners in the supply chain initiatives (Carter and Dresner, 2001; Zhu et al., 2008).
including growers, processors, distributors, and retailers. The focus
on multiple dimensions of sustainability, organizational types, and 2.2.2. External critical factors
industries make for difficult benchmarking and management A lack of power over their “independent” suppliers could hinder
effort. Risk management plays a significant role in the food supply enforcing suppliers' compliance with a firm's CSS. Thus, the focal
chain and its sub-suppliers, especially for social sustainability firm might be unable to positively influence a supplier's social
issues such as health and human risks (e.g. Diabat et al., 2011). and environmental behavior and to implement their auditing and
The focus of this previous research has been on descriptive and supplier development programs at supplier sites (Ciliberti et al.,
planning issues, with very little focus on direct issues of sub- 2008). In the food industry, retailers and food manufacturers
supplier management (Mena et al., 2013). frequently lack power over important suppliers as market-dom-
Directly approaching sub-suppliers bears several unique chal- inating, independent players exist at most stages of the value
lenges that are not existent within traditional supplier manage- chain (Smith, 2008). However, involving additional stakeholders
ment. There is a lack of direct control and dependence between into a firm's SSCM approach and making use of stakeholder
the focal firm and the sub-supplier. The focal firm is dependent on pressures (e.g., regulatory incentives, NGO pressures, or customer
its direct suppliers' willingness to disclose sub-suppliers and to demands) can positively contribute to influence supply chain
manage the dependent relationship. The focal firm might not be partners' behavior (Argenti, 2004; Seuring and Mueller, 2008a;
able to put direct pressure, normative or coercive, on the sub- Peters et al., 2011).
supplier. Commonly, there is no direct contractual relationship Within the food industry, NGOs and media frequently bring
that exists between the firm and its sub-suppliers. Issuing attention to health, safety and environmental issues, which
Table 1
Literature review of critical factors to SSCM.
Critical factors to SSCM Sources
Internal critical factors

Costs, lack of financial resources Ageron et al. (2012), Min and Galle (1997, 2001), Hervani et al. (2005), Wycherley (1999) and
Walker et al. (2008)
Investment reluctance (defining scope and evaluating Peters et al. (2011), Ageron et al. (2012) and Walker et al. (2008)
return-on-investment)
(Lack of) competences, and skills Bowen et al. (2001)
(Lack of) personnel commitment Cooper et al. (2000) and Walker et al. (2008)
Trainings Carter and Dresner (2001), Bowen et al. (2001) and Cooper et al. (2000)
Top management support Zhu et al. (2008) and Carter and Dresner (2001)
External critical factors

(Lack of) power Ciliberti et al. (2008)
Stakeholder partnerships (e.g., with NGOs, suppliers or Grimm et al. (2011), Granek and Hassanali (2006), Pesonen (2001), and Walker and Preuss
industry fellows) (2008)
Stakeholder pressures (e.g., regulatory incentives, NGO pressures, or Argenti (2004), Seuring and Mueller (2008a) and Peters et al. (2011)
customer demands)
(Lack of) commitment and trust between supply chain partners Jenkins (2006), Wycherley (1999) and Walker et al. (2008)
(Lack of) supplier competences Ageron et al. (2012)
(Lack of) information and transparency Awaysheh and Klassen (2010) and Ciliberti et al. (2008)
Cultural and language differences Ciliberti et al. (2008) and Awaysheh and Klassen (2010)
Geographical distance Awaysheh and Klassen (2010)
consequently pressure retailers, manufacturers and suppliers to suppliers or industrial associations. Such partnerships help to
change practices (Peters et al., 2011). For example, extensive demonstrate the relevance of a firm's SSCM and bundles necessary
campaigns were recently started against Nestlé to make aware of resources to improve sustainability conditions in its supply chains
its “unsustainable” sources of palm oil, which is used in its “Kit- (Grimm et al., 2011; Granek and Hassanali, 2006; Pesonen, 2001;
Kat” brand (Wolf, 2013). Commonly, these campaigns are directed Walker and Preuss, 2008). Fair Trade, the Round Table on Sustain-
towards the owner of the respective brand to achieve higher able Palm Oil (RSPO) and the Marine Stewardship Council (MSC) are
public attention and indirectly impact suppliers and sub-suppliers prominent certification examples within the food industry that
due to changing sourcing decisions of the brand owner. changed practices in multi-tier supply chains including sub-supplier
A lack of commitment and trust between the supply chain practices and adoption of sustainability standards (Peters et al.,
partners (i.e. the focal firm and its suppliers) may further hinder 2011).
close collaboration on sustainability factors or the participation of These findings concerning internal and external critical factors
suppliers in a firm's SSCM activities (Wycherley, 1999; Walker equally refer to small and medium sized enterprises (SMEs)
et al., 2008; Jenkins, 2006). engaging in SSCM. However, SMEs might face more difficulties to
Even if suppliers show a willingness to follow a firm's SSCM overcome barriers due to their more limited resources and lower
strategies, suppliers' low competence level may force the focal firm bargaining power compared to larger firms such as big retailers
to put higher investments into the supplier relationship in order to and multinational consumer goods manufacturers (Ciliberti et al.,
develop respective competences at supplier sites (Ageron et al., 2008, 2010).
2012). This may be especially true in many food supply chains Most of the cited critical factors primarily refer to general SSCM
where small farmers may lack skills and resources. settings and do not describe critical factors targeting management
Lacking information and transparency about supply chain part- settings of suppliers (exceptions may be critical factors such as
ners, their processes or policies are major barriers for identifying lack of personnel competences and skills, and supply chain partner
and assessing sustainability risks in supply chains (Ciliberti et al., commitment and trust, language and cultural differences). The
2008; Awaysheh and Klassen, 2010). In food supply chains, typical SSCM context refers to direct relationships between the
regulatory requirements concerning food safety systems ideally focal firm and its direct suppliers. Although stakeholder partner-
enable tracing flows of products and ingredients upstream to ships as critical factors provide examples of how sub-suppliers
agricultural (or chemical) production. However, powerful inter- might be indirectly influenced through initiatives such as RSPO or
mediaries or the characteristics of bulk goods might prevent MSC, specific sub-supplier critical factors for SSCM practices
traceability (Hamprecht et al., 2005; Smith, 2008). Further positive success have not been addressed in the literature. This sustain-
influences might be reflected in certification and labeling schemes ability focus is the purpose and contribution of this investigation.
such as “Fair Trade” that require a consistent adherence to under-
lying sustainability requirements and traceability up to the raw
material production (Raynolds, 2009). 3. Theoretical positioning of the study
Furthermore, cultural and language differences make SSCM
collaboration more difficult and requires additional effort to arrive Our study is well positioned within the theory of critical
at a common understanding (Ciliberti et al., 2008; Awaysheh and success factors. The theory of critical success factors (CSFs) has
Klassen, 2010). These differences may also be related to geogra- its foundation within strategy research (Dinter, 2013; Daniel, 1961;
phical distance, which may further hamper the implementation of Rockart, 1979) and is defined as “the limited number of areas in
auditing programs or the set-up of necessary collaboration (Sarkis, which results, if they are satisfactory, will ensure successful
2012a; Awaysheh and Klassen, 2010; Koplin et al., 2007). Given the competitive performance for the organization”. The theory of CSFs
geographical restrictions for cultivation, cultural as well as geo- argues that poorly aligned CSFs will lead to less desirable results.
graphical distance is characteristic of food supply chains. Consequently, CSFs pinpoint on “the areas in which good perfor-
Several of these hindering critical factors could be countervailed mance is necessary to ensure attainment of those goals” (Rockart,
by strategic stakeholder partnerships, for example with NGOs, key 1979, p. 85).
CSFs and related activities should be consistently monitored for chains. One key aspect was the management of sub-suppliers with
proper management decisions. Key performance indicators mea- respect to CSS compliance. The CSS comprised social and environ-
suring the CSFs and their integration into performance manage- mental sustainability criteria with linkages to existing cross-
ment systems are means for effective management decisions. industry sustainability standards such as the Business Social
Besides focusing on CSFs themselves, the necessary actions on Compliance Initiative Code of Conduct (BSCI, 2011a, 2011b).
how to get there, i.e. process, should be considered as well. Ideally, The study participants represented a significant portion of the
a clear causal relationship between actions and target outcomes entire product-specific supply chain, including close linkages to
can be drawn (Kaplan and Norton, 1992, 1996). the raw material extraction portion of the food supply chain. Study
In addition to the theory of CSFs applicability to a firm's overall participants also represented a major portion of the added value of
strategic competitive advantage, the theory of CSFs has been the end product. In both cases, the supply chain complexity was
linked to diverse fields such as project management and informa- manageable, while the aforementioned challenges of managing
tion systems management (Belassi and Tukel, 1996; Zwikael and sub-suppliers remained evident, especially the relevance of urging
Globerson, 2006; Shenhar et al., 2002; Poon and Wagner, 2001). sub-suppliers for compliance with the focal firms' CSS.
Past research in these fields has shown that the presence of The respective (dyadic) business relationships of the field study
specific CSFs resulted in project implementation success, even- companies build on relatively long established partnerships/colla-
tually increasing overall organizational success (Dinter, 2013). borations (more than 2–5 years), thus the field study research was
Field of study idiosyncrasies require the identification of vary- embedded in an open and trusting environment.
ing CSFs separately. There are difficulties in identifying and In the following a brief overview of the focus group participants
determining a CSF's relative importance to achieve targets is provided (also see Table 2).
(Leidecker and Bruno, 1984). “Success” is not always easy to define
and it depends on the taken perspective (Chan et al., 2002), the 4.1.1. SC1: the chocolate/sugar supply chain
theory of critical success factors can thus be linked to strategic and The focal firm “Maestrani” is a Swiss producer of chocolate and
organizational contingencies. confectionery specialties. The company is a relatively small player
Considering focal firms' objectives in our research context, in the chocolate market. Their major supply products are cocoa
success is achieved when a sub-supplier's performance is compli- butter and cocoa paste which—besides sugar, milk powder and
ant with a focal firm's CSS. In order to achieve this ultimate goal, it flavoring—account for the main ingredients.
is necessary to identify and to get access to the sub-supplier, thus “ZMR”, one of the strategic Swiss-based direct suppliers of
being able to conduct necessary assessment and collaboration Maestrani, operates a sugar mill in Switzerland and specializes in
practices if deficiencies are revealed. Consequently, identifying the production and trading of sugar products. They offer white
relevant critical factors can be important contributions to success- refined sugar, cane sugar, and bio-sugar. Their suppliers are from
ful sub-supplier management. Switzerland, European neighboring countries, and overseas.
Our literature review highlighted several enablers and barriers. “ZAF”, a direct supplier of ZMR and an indirect sub-supplier of
The specific consideration of critical factors for SSCM such as Maestrani, operates two major sugar mills in Switzerland. ZAF is
implementing sustainable supply chain strategies to ensure sub- the only processor of sugar beets and has a leading position in the
suppliers' compliance with a firm's CSS is not covered in the Swiss sugar market.
literature. Firms who face the unique challenges of managing sub-
suppliers would highly benefit from such guidance. Thus, within
the framework and understanding of the theory of CSFs, the 4.1.2. SC2: the fruit/juice supply chain
present research seeks to identify factors that contribute to The second focal firm “Obermeilen” specializes in the proces-
successful sub-supplier SSCM implementation. sing of fruits and the creation of flavors and extracts. In 2010,
Subsequently, the methodology to identify CSFs for successful Obermeilen acquired the jam business of a major Swiss consumer
sub-supplier management within focal firm SSCM initiatives will goods manufacturer. It purchases about 1000 different product
be presented. types from 200 national and international suppliers per year,
among them sugar and fruits. Depending on demand fruits arrive
in multiple forms: entirely, puréed, frozen, diced, as concentrate or
4. Methodology mousse.
“Allfood”, the direct supplier, is a Swiss trading company and
Due to the immaturity of sub-supplier management research imports and exports food and raw materials. Among their pro-
and the complexity of multi-tier supply chain partners and their ducts are fruit juices and fruit juice concentrates or purees,
interactions in food supply chains, an exploratory, qualitative, field beverage bases, and fruit and vegetable for industrial purposes.
study research approach was chosen. Aiming for an investigation Most of their products are sourced from South America (Brazil,
of critical factors for successful sub-supplier management for Ecuador, Argentina, Peru, etc.), but also from India, the Philippines
SSCM, a research collaboration with two multi-level food supply and South Africa.
chains was formed. Insights were gained through group settings “Capricorn”, a direct supplier of Allfood and an indirect sub-
(e.g. workshops) and semi-structured interviews with representa- supplier of Obermeilen, is an India-based food-processing com-
tives of each supply chain. A number of site visits to the focal pany specializing in manufacturing pulp, purees and concentrates.
companies and some of their suppliers were also completed. Capricorn processes fresh tropical fruits (e.g. mango, pineapple,
guava, papaya, banana, etc.) and vegetables (e.g. gherkins, peppers,
4.1. Sample beans, potatoes and green peas etc.) in frozen form.
The sample represented two multi-tier food supply chains, 4.2. Data collection
each consisting of the focal firm, a direct supplier, and a sub-
supplier directly supplying the supplier. Chocolate/sugar and fruit/ Initial CSFs evidence on sub-supplier management in the field
juice product supply chains were selected. These supply chains study supply chains was observed and gathered by interactively
were selected because the two focal firms sought to ensure working with these organizations in a project setting, where
compliance with their CSS throughout their entire food supply specific managerial issues were addressed. In addition to these
Table 2
Field study participants of the two focus group supply chains.
Role The chocolate/sugar supply chain The fruit/juice supply chain
Focal firm Maestrani Obermeilen

Maestrani Schweizer Schokoladen AG www.maestrani.ch Obermeilen Schweizer Getränke AG www.obermeilen.ch
Turn-over: ca. CHF 45-50 mio. Turn-over: ca. CHF 50 mio.
Employees: ca. 150 Employees: ca. 100
Project members/informants: Project members/informants:

Chief Operations Officer Chief Executive Officer
Head of Procurementa Head of Procurement & Logisticsa
Direct supplier ZMR Allfood

Zuckermühle Rupperswil AG www.zuckermuehle.ch Allfood AG www.allfood.ch
Turn-over: n/a Turn-over: n/a
Employees: ca. 55 Employees: o 10

Chief Executive Officer General Manager
Senior Sourcing Managera Deputy General Managera
Quality Manager
Indirect sub-supplier ZAF Capricorn

Zuckerfabriken Aarberg þFrauenfeld AG Capricorn Food Products India Ltd.
www.zucker.ch www.capricorngroup.com
Turn-over: ca. CHF 210 mio. Turn-over: n/a
Employees: ca. 270 Employees: n/a

Head of Quality & Sustainabilitya Assistant Manager Exportsa
a
Interviewee for structured interview for CSF identification.
collaborative, field-based interactions, two rounds of semi- 4.3. Data analysis

structured interviews with members of the two supply chains to
support the systematic identification of CSFs were also completed Coding was completed to identify CSFs that could enable or
(Eisenhardt, 1989b). The semi-structured interview details are hinder the management of sub-suppliers in the sustainability
provided below and in Appendix A. context. Coding was initiated only after data collection was
The supply chain participants sought to implement their CSS completed. The coding process followed multiple steps as recom-
within their entire supply chains, including sub-suppliers beyond mended by Miles and Huberman (1994) and was further combined
the tier-1 level. Study participants included “C-level” managers, with a template analysis techniques for capturing, ordering and
purchasing managers or additional employees with sourcing/ interpreting the taken field notes, archival data, and qualitative
quality/sustainability functions. Research team members were also interview data (King, 2004; Waring and Wainwright, 2008).
embedded within the supply chain decision and project manage- In the initial stage, two researchers individually started to
ment process (especially with the focal organizations) for approxi- derive an analytical template for each field study company. A set
mately a year. Observational information was gathered and field of pre-defined codes, which were based on identified critical
notes taken throughout the year, transcribed, and maintained in a factors from the literature review, the interview guideline, and
field study data base (Yin, 2003). on individual company experiences were initially used (King,
In order to enable a more systematic and structured identifica- 2004). Coding was further extended to common terminology used
tion of targeted CSFs, the research team conducted additional among the field study participants, since the objective was to
semi-structured interviews with the most experienced project identify CSFs that are important or unique to the management of
members of each field study company. To enable broader, holistic sub-suppliers in the sustainable food supply chain context, which
identification of factors, three different interview guideline proto- might have not been reported in the literature yet. As a key feature
cols were developed in line with the previous literature review of template analysis techniques and similar to affinity diagrams, a
and initial experiences that were gained within the year-long field hierarchical organization of codes, with groups of similar codes
study settings. Each protocol was adapted to the perspective of the clustered together to produce more general higher-order codes
interviewed supply chain partner, namely (1) the focal firm, (2) the was applied (King, 2004). This enabled a structured discussion and
direct supplier, and (3) the sub-supplier (see Appendix A). The reflection of the identified factors.1
“supply-chain-tier-specific” adaptations addressed the individual To avoid investigator bias and to ensure inter-rater reliability,
roles, objectives, challenges, and outcomes that the supply chain the individual researchers' results were discussed after each
partners might have within the sub-supplier management initia- process step. Initially an analysis of each field study company
tive. Consequently, field study participants' explanations should was completed separately before comparing the individual field
enable the identification of perspective-specific critical (success) study companies and perspectives. Following this procedure, an
factors. additional academic expert was involved to initially validate the
Not all members of the supply chain were physically inter-
viewed. The interview with the Indian-based sub-supplier Capri-
1
corn was conducted via telephone, all other interviews took For example, the final high-order codes categorize the CSFs into (1) focal
place at company sites, where observations could also be made. firm-related, (2) relationship-related, (3) supply chain partner-related, and
(4) context-related CSFs. On a lower order, CSFs might consist of multiple
The targeted interviews on CSFs lasted between 60 and 90 min dimensions (e.g. the CSFs suppliers’ and sub-suppliers’ perceived value is con-
and were recorded, transcribed, and subsequently verified by stituted by the two dimensions “benefits” and “sacrifices” that result from the sub-
interviewees. supplier management initiative) (Walter et al., 2001; Eggert and Ulaga, 2002).
Table 3
Identified CSFs and provided evidence within the focus group.
Identified critical factors The chocolate/sugar supply chain The fruit/juice supply chain
Maestrani ZMR ZAF Obermeilen Allfood Capricorn

Focal firm Supplier Sub-supplier Focal firm Supplier Sub-supplier
CSF1 Trust between focal firm and direct supplier X X X X

CSF2 Trust between direct supplier and sub-supplier X X X
CSF3 Focal firm's buyer-power (over direct supplier) X X X
CSF4 Direct supplier's buyer-power (over sub-supplier) X X X
CSF5 Committed long-term relationship between direct supplier and sub-supplier X X X X X
CSF6 Supply-know-how of focal firm X X
CSF7 Direct supplier's willingness to disclose sub-suppliers X X X X
CSF8 Involvement of direct supplier X X X X X
CSF9 Perceived value for direct supplier X X X X
CFS10 Perceived value for sub-supplier X X X X
CSF11 Low risk of supplier-by-passing X X X X
CSF12 Sub-supplier's capability to comply with requested sustainability standards X X X
CSF13 Geographical distance between supply-chain-partners X X X X
CSF14 Cultural distance between supply-chain-partners X X X X
results. Table 3 provides a field study company analysis which led These observations were made at both the focal firms and their
to the identification of the respective CSFs. Only those CSFs which direct suppliers as the two following quotes highlight:
were considered key by more than one field study company were
“When trust between us and a direct supplier exists, we don’t need
included.
to force this supplier to allow us the management of his sub-
To assure the significance and completeness of identified CSFs,
supplier, he rather supports us.” (Obermeilen, Head of Procure-
feedback cycles amongst the field study companies were initiated.
ment & Logistics)
The field study companies provided feedback on the presented
“An essential prerequisite is a trustful relationship to the buying
CSFs and their CSF definitions. Finally, group discussions con-
firm. Otherwise, we would not enable them to approach our
firmed the selection of the final set of 14 CSFs as illustrated in
suppliers [i.e. firm’s sub-suppliers].” (Allfood, Deputy General
Table 3. These 14 CSFs also seem to reflect a cognitively manage-
Manager)
able number of key factors—much research even argues to reduce
the number (Fu et al., 2012). However, since the present research These observations are in line with the existent SSCM litera-
reflects exploratory work in an immature field, insights and CSFs ture. Trust described in this literature was needed in both cases for
are not limited at this stage. general buy-in into the focal firm's SSCM approach (e.g. Walker
et al., 2008). In our context the willingness to disclose sub-supplier
information and partner on sub-supplier activities are the goals.
5. Results: identification of critical success factors For both direct and sub-supplier relationships, trust plays a
major role. The “trust threshold” for building new relationships
This field study research identified 14 critical success factors and operations versus disclosing sub-suppliers' operations will
(CSF) for managing sub-suppliers (see Table 3). In the following differ. Consequently, further research on how the various facets of
sections each of the 14 CSFs are individually reviewed. In each trust can be distinguished in these relationships, is needed.
case, a definitional foundation for the CSF and evidence for the CSF
resulting from study participants input are provided. Reconcilia- 5.2. “Trust between direct supplier and sub-supplier” (CSF2)
tion between participant input and literature is also completed.
Potential research avenues are outlined. Similar to the focal firm-direct supplier relationships, trust
between the supplier and sub-supplier is considered a critical
factor. Trust in this situation is defined the same way as in CSF1.
5.1. “Trust between focal firm and direct supplier” (CSF1) In a trusting relationship a sub-supplier, in response to CSS
requirements, must not fear retribution for CSS non-compliance.
Trust between a buying firm and its direct supplier can be Rather the sub-supplier would expect support to overcome defi-
described by the relationship in which the two parties perceive ciencies, as the following quote highlights:
each other as credible and benevolent (Doney and Cannon, 1997).
Trust is critical for strategic supply chain partnerships (Handfield “We respond to sustainability requirements if we believe that they
and Bechtel, 2002). will keep us as a preferred supplier. For example at one of our big
The study participants frequently mentioned trust as one of customers, a global beverages manufacturer, there is nothing
the key factors. Given the criticality of ingredient quality for food explicitly written. It's just a business commitment which we have
production, supplier trust plays a particularly high role in the food with them, which is based on trust between them and us.”
business. Greater mutual trust between the focal firm and a (Capricorn, Assistant Manager Exports)
supplier resulted in greater information disclosure and access
This perspective was supported by statements at the direct
with respect to the suppliers' supply base (Lambert et al., 1996).
supplier level:
Suppliers would also be more proactive in supporting the focal
firm within sub-supplier initiatives. In less trustful relationships “Sub-supplier management is successful, when our supplier [(i.e.
suppliers fear risks associated with focal firms bypassing the firm's sub-supplier)] knows that we are a trustful partner, who
supplier and directly sourcing from the respective sub-supplier, continuously sources from them and does not terminate a con-
or put pressures on both the supplier and sub-supplier resulting in tract, if things aren’t immediately as expected.” (ZMR, Senior
unfavorable economic outcomes. Sourcing Manager)
These observations support some of the suppositions of CSF1. “Our market position and power over a supplier [i.e. Maestrani's
Although the concept of trust is grounded in SSCM and other sub-supplier] helps a lot to motivate them in favor of any sub-
fields, our context introduces a further entity to the inter- supplier management activities.” (ZMR, Senior Sourcing Manager)
organizational trust equation. Even when a direct supplier and
Making use of “power” to influence direct supply chain part-
sub-supplier develop mutual trust, uncertainty still remains on
ners is well supported by the literature as diffusion of practices
how the focal firm would react. Some examination on the
through normative institutional pressures is greater in power
mediating relationships between the various levels of trust is
situations. Given two dyadic power relationships (CSF3 and
required. Since the sub-supplier does not maintain a contractual
CSF4), a question arises on how these two dyadic power relation-
relationship with the focal firm and both entities commonly do
ships may influence or complement each other. Does a focal firm's
not build up on a long-term relationship, it is yet unknown what
power over its supplier have direct influence on the sub-supplier
factors may particularly contribute to facilitate trust between
as well? One focal firm respondent reported the attempt to
these more distant and independent entities.
directly pressure one of their sub-suppliers, although no contrac-
tual relationship existed between the two.
5.3. “Focal firm's buyer-power (over direct supplier)” (CSF3)
“(…) or we try to directly put pressure on the sub-supplier, this
Focal firm's buyer-power over its direct supplier is determined works depending on how valuable the sub-supplier perceives the
by a direct supplier's dependence on the focal firm for valued supply channel to us.” (Obermeilen, Head of Procurement &
resources (e.g. revenue) (Cox, 2001). Transaction cost economics Logistics)
(Williamson, 2008) and resource dependency theory (Crook and
Considerations of multiple separate dyadic power relationships
Combs, 2007) play significant explanatory roles in understanding
do exist (Cox et al., 2001; Cox, 2004). However, no “boundary-
these power relationships.
expanding” power interactions effects have been considered in the
The focal firms within the studied firms expressed their
literature. A multistage supply chain “power” construct is required
“power” as important vehicles for enabling sub-supplier manage-
to effectively investigate these issues.
ment practices adoption. If the direct supplier did not see the
relevance of managing sub-suppliers or was less willing to support
5.5. “Committed long-term relationship between direct supplier and
the focal firm, putting pressure on the supplier counters their
sub-supplier” (CSF5)
reluctance. However, managers stated that pressuring a business
partner is not a desirable method.
Well-established business relationships that partners consider
“If we anticipated any non-compliance at sub-supplier sites, we so important that it requires significant effort and resources
initially stress our direct supplier to take actions. In case the direct exemplify committed long-term relationships (Ganesan, 1994;
supplier perceives us as an unimportant customer, he may take us Morgan and Hunt, 1994).
not seriously, but if we are a key account, the response to our Respondents frequently stated that long-term oriented rela-
requests is much better.” (Obermeilen, Head of Procurement & tionships between the direct supplier and sub-supplier ease sub-
Logistics) supplier initiative implementation. These types of relationships
allow for mutual trust development and openness about issues
In turn, representatives of the direct suppliers confirmed that (Lambert et al., 1996). Both suppliers and sub-suppliers stated that
they would more likely respond to a buyer's request if they felt they are more willing to invest time and resources into requests by
dependent on the buying firm due to the buying firm's demand the focal firm, if they knew that these investments have long term
volume. In the food industry, focal firms frequently lack power implications. However, the heterogeneity of farm sizes and of
over important suppliers, since independent players exist at most harvest quality often require buyers to exchange suppliers on a
stages of the value chain (Smith, 2008). frequent basis. Comments such as these were prevalent:
These observations are in line with existent research that
examined how suppliers respond to pressure and adjust their “We pay attention to sub-supplier management requests, espe-
own operations, for example, by implementing ‘voluntary’ envir- cially if we maintain a long-term relationship to that [sub-]
onmental measures such as ISO14001 certification in response to supplier, since it means much to us too.” (Allfood, Deputy General
buyer requests (Delmas and Montiel, 2009; Zhu and Sarkis, 2007; Manager)
Gonzalez et al., 2008). Often these requirements are anchored as “We totally understand that the customer may have difficulties
contractual elements. Since in our context, a firm's request con- with agreeing to a long-term contract. But at the same time we
cerns sustainability issues outside of supplier's own organizational should be given a preference as a supplier if we invested in
boundaries and thus direct control, a supplier may face higher sustainability compliance with a longer term relationship in
challenges responding to such requests. In fact, the supplier might mind.”(Capricorn, Assistant Manager Exports)
want to comply but lacks influence over suppliers to get them SSCM literature states that suppliers are more open or put in
aligned. more effort if they are embedded in a long-term relationship (e.g.
Walker et al., 2008; Wycherley, 1999). However, in our study's
5.4. “Direct supplier's buyer-power (over sub-supplier)” (CSF4) context, both the sub-supplier and the direct supplier are required
to be responsive to a focal firm's requests. In this situation both
Similar to trust as a double-link factor, buyer-power can be sides want to make sure that they get their investments paid off
defined in a similar context. Whereas CSF4 enables the focal firm over time.
to reveal a sub-supplier's entity (i.e. disclosure of sub-suppliers Noticing that the supplier and the sub-supplier are “coupled”
due to focal firm pressure) a direct supplier's buyer-power is an by means of a committed long-term relationship may enable a
important factor that allows for greater focal firm-sub-supplier focal firm to pass its requirements through to the sub-supplier—
access for direct interactions. The joint approach of a focal firm's even without contractual relationships. Future research might
CSS requirements and a direct suppliers' assistance combined with examine how the term of a relationship between the supplier
their buyer power, will result in higher response rates by sub- and sub-supplier affects the relationship to other parties such as
suppliers, as stated by study respondents: the focal firm (Watson, 2001). A specific research question is
whether this situation puts a focal firm in a more favorable willingness for disclosure and other CSFs such as power, existent
position. trust or perceived value were observed (Lambert et al., 1996).
Antecedents to willingness to share sub-supplier information
5.6. “Supply-know-how of focal firm” (CSF6) remain unclear. Further study of principal-agent theory lenses
could be furtherer grounded within SSCM and sub-supplier
Supply-know-how of the focal firm reflects the firm's compre- management (Sarkis et al., 2011).
hensive knowledge of its supply chain—including knowledge of
procured products, related processes, and characteristics of sour- 5.8. “Involvement of direct supplier” (CSF8)
cing markets (e.g. cultural specificities).
Focal firm respondents in this study outlined the importance “Involvement of direct supplier” reflects a direct supplier's
of having developed in-depth supply knowledge such as supply active mediating role within the sub-supplier management activ-
chain structure, inherent processes, involved people and other ities. The coordination and processing of the sub-supplier manage-
contextual factors. Yet, traditionally, food manufacturers focus ment initiative is not left to the focal firm itself, rather support of
their attention on the quality of the supplied materials, leaving the direct supplier is required.
control of the making of those materials entirely to their suppliers. Members of all supply chain tiers, in this field study, underlined
Lacking this knowledge, firms could not purposefully and effec- the importance of involving the direct supplier. The focal firm
tively address sustainability issues with their supply chain part- emphasized that the direct supplier involvement brings them
ners. The firms would be more dependent on external business “closer” to the sub-supplier. In the food chain, local farmers or
partners such as consultants and auditors to achieve their objec- producers often have no direct link to manufacturers as traders
tives. In addition, this involvement would further tighten available bridge between them. By involving the direct supplier, the focal
resources that are available for firm's SSCM initiatives. firm becomes more rapidly familiar with sub-supplier
characteristics.
“Managing a sub-supplier would be particularly difficult for us, if
we don’t understand the local market conditions, the processes, or “If you would like to visit a sub-supplier site, the respective direct
the mentality.” (Obermeilen, Head of Procurement & Logistics). supplier needs to join. He knows the sub-supplier, I do not. It will
Similarly, the literature highlights how comprehensive supply only be effective, if we take action jointly.” (Maestrani, Head of
management capabilities can positively influence a firm's financial Procurement)
and operational outcomes (Carr and Pearson, 1999; Sánchez-
Furthermore, the interviewed managers of the direct suppliers
Rodríguez et al., 2003). SSCM research proposed that these more
explained that they can mitigate some of sub-suppliers potential
generic supply management capabilities build the foundation to
concerns with respect to firm's engagement.
build up sustainability focused supply management capabilities
(Reuter et al., 2010; Foerstl et al., 2010). “If we approach our supplier and explain to them the relevance
It could be argued that the focal firm initially requires this basic and that one of our strategic customers wants to process certain
supply chain knowledge before it can diffuse sustainability cap- activities such as site visits or audits, there is a good chance that
abilities through its supply chain. Research may examine what our supplier accepts—without our involvement the chances of
roles basic supply chain knowledge level relates to sustainability success may be almost zero.” (ZMR, Senior Sourcing Manager)
diffusion.
The sub-suppliers in our studies underlined the importance of
5.7. “Direct supplier's willingness to disclose sub-suppliers” (CSF7) having the direct supplier (i.e. their customer):
“(…) we insist on the involvement of our direct customer. We are

CSF7 describes the willingness of the direct supplier to reveal
the sub-supplier and haven’t been in touch with the focal
its sub-suppliers to the focal firm.
company. We have been dealing with the direct supplier. They
“In general, we don’t just simply disclose our suppliers. We understand our business as well as the focal company's business
carefully evaluate to whom we do and to whom we don’t.” (…) the involvement is more convenient for us.” (Capricorn,
(ZMR, Senior Sourcing Manager) Assistant Manager Exports)
The willingness to provide sub-supplier information is an Research has shown that the involvement of competent part-
important antecedent to broader direct supplier involvement ners lead to higher success rates of sustainability initiatives (Hart,
and a prerequisite for supply chain transparency. The willingness 1995; Sharma and Vredenburg, 1998; Pagell and Wu, 2009). In line
to disclose sub-supplier information is not a prominent concept with relational view theory, a firm's sub-supplier initiative can
within supply research, but this item could be related to informa- benefit from direct supplier's complementary resources (Dyer and
tion sharing effort in general. It can also be rooted into general Singh, 1998) by exploring and exploiting supplier's knowledge and
principal-agent-settings (Eisenhardt, 1989a; Sarkis et al., 2011). resources (e.g. trustful relationship to sub-supplier or process
The agent (i.e. direct supplier) hides information (i.e. entity and knowledge) (Carmin et al., 2003; Roome and Wijen, 2005; Roloff,
performance of sub-suppliers) from the principal (i.e. focal firm). 2008).
Current codes of conduct of voluntary sustainability initiatives Distinguishing from past research, the studied focal firms do
such as the Business Social Compliance Initiative (BSCI), which is not benefit within their own organizational boundaries from
increasingly adopted by retailers, require any members' supplier to business partner involvement, but that the positive effect was
disclose their supply base (BSCI, 2011a). Food safety systems might transferable and took place within the indirect business relation-
require the “tier-wise” disclosure of suppliers, if issues are ship to the sub-supplier.
revealed (Hamprecht et al., 2005; Roth et al., 2008). Respondents At least two research questions arise from direct supplier
in this study stated that not every supplier is willing or can be involvement in sub-supplier management—(1) when does a sup-
forced to supply this information. Thus, supplier's disclosure plier take on the role of a “gatekeeper” to the sub-supplier, and
willingness reflects one of the key CSFs for sub-supplier adoption (2) what supplier resources are important to ensure effective sub-
of sustainability practices. Inter-relationships between supplier's supplier management from a sustainability perspective?
5.9. “Perceived value for direct supplier” (CSF9) Sub-supplier's perceived value does not only result from the
relationship to the sub-supplier's customer, but also indirectly
CSF9 focuses the direct supplier's perceived value from the from the business relationship between the focal firm and the
execution of sub-supplier management activities or from further direct supplier. This situation is especially true when both
aspects in sub-supplier related activities with the focal firm. Value the direct supplier and the sub-supplier are highly dependent on
can be described as a trade-off between benefits and sacrifices and the focal firm's order volumes. In these circumstances the sub-
includes both monetary and non-monetary elements (Walter and supplier views complying with CSS standards as a “benefit” by
Ritter, 2003; Walter et al., 2001). maintaining a sales channel to the focal firm. Having a CSS may
Both direct suppliers participating in this field study stressed also provide greater future opportunities for the sub-supplier with
the amount of effort required to be involved in sub-supplier other organizations who may have similar compliance require-
management practices. Food ingredient suppliers often deal with ments. Similar to CSF9, further research is required to have a
a large number of geographically dispersed suppliers and numer- comprehensive understanding about what sub-suppliers do value
ous customers with different objectives, questioning efficiency if when approached by focal firms.
they were to respond to all requests. They are only willing to
support sub-supplier management if they perceive benefits from 5.11. “Low risk of supplier-by-passing” (CSF11)
these efforts.
“Risk of supplier-by-passing” is the risk that the focal firm
“We are open to enabling sub-supplier management for strategic
terminates a business relationship with the direct supplier and
customers. But if a customer [i.e. focal firm] only buys a few
starts to source directly from the sub-supplier. This activity has
hundred Kilos per year, the efforts for coordination and data
also been defined as disintermediation in the literature (Rossetti
processing are just too high.”(ZMR, Senior Sourcing Manager)
and Choi, 2008; Spekman et al., 2002).
“Order volumes play a major role. From an economic perspective, Direct supplier respondents in the study made it clear that they
there must be an appropriate balance between effort and benefits. are more reluctant to support any sub-supplier management
Gathering information or even taking actions at sub-supplier sites initiative if it threatened their business. This dimension is also
mean a lot of efforts to us. Consequently, our willingness to an important contributor to level of trust. This risk may be high, if:
support sub-supplier management is connected with order (1) the focal firm has capabilities for direct sourcing from the sub-
volumes and a prospected long-term relationship, both with the supplier or (2) both the focal firm and the sub-supplier have a low
customer [i.e. focal firm] and the supplier [i.e. sub-supplier].” commitment to the business relationship with the direct supplier.
(Allfood, Deputy General Manager) In the food business with its common consecutive trading steps,
this is a particular concern.
If sub-supplier management is meant to help green supply
chains, a supplier would like to see returns on it (Castka and “If we know, that our customer does not directly source from
Balzarova, 2008). Whether it pays off to be “green” may be part of comparable suppliers in similar regions or neither has the
this debate (Ambec and Lanoie, 2008; Hart et al., 1996; King and respective skills to do so, we are more open to disclose our
Lenox, 2001). The ‘it pays to be green’ discussion from a supplier suppliers and to enable access to them.” (Allfood, Deputy General
perspective has yet to be fully addressed. Especially not the Manager)
consideration of supplier's value deriving from their engagement “It happened for commodities, which we only traded basically:
in sub-supplier management, thus the business case needs to customers started to directly source from our suppliers. In such
be made. cases, we would not easily disclose our supply base and enable
sub-supplier management.” (ZMR, Senior Sourcing Manager)
5.10. “Perceived value for sub-supplier” (CSF10)
Existent SSCM research has not explicitly evaluated the risk of
Sub-supplier's perceived value in being involved in their supplier-by-passing and disintermediation. Although more effi-
customers' customers' initiatives can be defined similarly to cient supply network design may include fewer supplier linkages,
CSF9. It can be direct or indirect benefits that it perceives or explicit evaluation based on the resources supplied by sub-
accrues, but a cost/benefit evaluation is probably needed. suppliers has not been an issue for investigation. The fact is that
Sub-supplier respondents in this field study explained that disintermediation is not necessarily a barrier for SSCM itself, and
fulfilling compliance with the focal firm's CSS clearly required may serve as a way of making the supply chain more sustainable.
costs and extra efforts. They consequently justified these “sacri- The major issue is this direct supplier risk hinders a direct
fices” with sales volumes or price premiums they could achieve by supplier's willingness to share information about their supplier
fulfilling CSS compliance. Depending on their power, they might base. This issue is a barrier for managing sub-suppliers.
still be forced to implement the focal firm's request. In such cases, A recent study by Choi and Linton (2011) provided examples of
sub-suppliers have to change their business model to regain how firms sought to set up direct contracts with critical sub-
profitability, e.g. by adjusting business practices that are out of suppliers. Sustainability was found to be one driver; other drivers
the focal firm's scope (Perez-Aleman and Sandilands, 2008; included ensuring product supply and maintaining control of
Ciliberti et al., 2008). prices. The relationship between this factor and trust, information
sharing, and supplier risk management requires investigation.
“Any compliance comes with costs. If there are new requirements,
we have to change systems or need to increase the amount of 5.12. “Sub-supplier's capability to comply with requested
documentation. To justify these costs we have to explain it to the sustainability standards” (CSF12)
management in terms of sales being supported with those costs.”
(Capricorn, Assistant Manager Exports) CSF12 focuses on sub-suppliers' sustainability performance and
“Additional work and expenses must be convincingly justified. If their ability to fulfill a focal firm's sustainability standards (e.g.
they are willing to pay premium for the additional expenses, then working hours, wages or biodiversity).
we are willing to participate in certain initiatives.” (ZAF, Heady of From the study respondents, “sub-supplier's level of compli-
Quality and Sustainability) ance” was observed as a recognizable factor influencing both
suppliers and sub-suppliers' preparedness for participation in sub- In many cases, cultural and geographical distances go along
supplier management initiatives. This factor comes into play in the with each other.
food sector particularly for small farms in regions with different
cultures and political systems. “I noticed, that especially German (sub-)suppliers take us ser-
iously, although we source relatively small volumes from them.
“We would be a little bit reluctant to support sub-supplier I think it has to do with the shorter distance and the very similar
management immediately if we also perceived this sub-supplier cultural area.” (Obermeilen, Head of Procurement & Logistics)
as not capable of fulfilling certain requirements. We fear the
possibility of not meeting an exclusionary criterion for exclusion Our observations are in line with past research that highlighted
and eventually lose the business.” (Allfood, Deputy General how firms struggle to implement their sustainable supply chain
Manager) strategies in foreign countries with differing cultures (Sarkis,
2012a, 2012b). Commonly, supply chain partners embedded in
“We are actually prepared to comply with any sustainability
similar cultural structures can build up on similar rules, norms,
program of any other company as well. So we are willing to
and values (Awaysheh and Klassen, 2010). Two directions for
cooperate.” (Capricon, Assistant Manager Exports)
future research can be used to examine this issue. Further knowl-
edge is required for sub-supplier management adaptation prac-
The factor of “sub-supplier's compliance” incorporates a
tices to differing cultural contexts. Second, future research might
dilemma. On the one hand, expected low levels of compliance
examine whether statistical data such as a “regulatory quality
may lead the supplier and sub-supplier to fear consequences and
index” could indicate regions in which implementation of a firm's
be less open to sub-supplier management practices. Alternatively,
CSS is more likely to be successful.
low levels of compliance give the focal firm the initial reason to
engage in sub-supplier management.
Although the SSCM literature has called for more research
6. Discussion and analysis
examining supplier compliance with sustainability standards
(Millington, 2008), few studies consider levels of suppliers' com-
Fourteen CSFs were determined from the field study investiga-
pliance (Jiang, 2009a, 2009b; Egels-Zandén, 2007). A challenge
tion. The overall results mapped well to identified factors from
exists in finding reliable and objective compliance data. Existing
the literature. Some of the SSCM CSFs which were identified in the
studies consider only the compliance of direct suppliers. Evaluat-
initial literature review were not directly observed within the
ing sustainability in a multi-tier supply chain is even more difficult
exploratory field study findings. For example: (1) top management
requiring sustainability compliance data from suppliers beyond
support, (2) personnel commitment, and (3) lack of (financial)
the tier-1 level.
resources were not explicitly identified by the respondents. One
explanation might be that interviewed managers were already
5.13. “Geographical distance between supply-chain-partners” committed to the subject matter and also represented senior
(CSF13) management level themselves. Without having a minimum level
of resources, any effort for managing sub-suppliers would not be
CSF13 refers to the geographical (physical) proximity between feasible. In fact, due to the embeddedness of sub-supplier manage-
the location of a focal firm, direct supplier and sub-supplier. ment in SSCM, the unobserved CSFs might already have been
Respondents felt that significant geographical distance between implicit prerequisites. In turn, this research highlighted (1) per-
suppliers and sub-suppliers made it more difficult to acquire insights ceived value for direct supplier and (2) sub-supplier, (3) low risk
into their operations and processes due to greater effort and resource of disintermediation, and (4) sub-supplier's capability to comply
requirements, especially for site visits to farms or production sites with requested sustainability standards as important CSFs. These
that require significant travel effort. Supply chain partner commu- CSFs have not been extensively considered in existent SSCM
nication is typically limited to phone and email. Face-to-face research due to the preponderance of research focusing on dyadic
meetings are less frequent than less distant organizations. Conse- direct supplier relationships.
quently, a focal firm is less familiar with sub-supplier's sustainability
performance.
6.1. Theoretical implications
Existent SSCM literature acknowledges that increasing distance
negatively influences data gathering, assessment, and collabora-
As the theory of critical success factors acknowledges, CSFs are
tion (Awaysheh and Klassen, 2010). Sub-supplier management
not only key for achieving high firm performance, but also
practices related to issues of geographical distance between the
particularly important for any strategy implementation and indi-
focal firm and its (sub-)supplier do not exist.
vidual project success (Dinter, 2013; Shenhar et al., 2002; Zwikael
and Globerson, 2006). It has even been highlighted that CSFs are
5.14. “Cultural distance between supply-chain-partners” (CSF14) contingent on the individual settings (Chan et al., 2002). Little
knowledge exists about CSFs for sustainable supply (chain) man-
The culture and society in which the supply chain partners are agement contexts (Ageron et al., 2012), and much less knowledge
embedded in play an important role in sustainability compliance exists for the sub-suppliers and the food supply chain context. This
dimensions (Hofstede, 1980; Awaysheh and Klassen, 2010). research has sought to contribute to a better understanding of
The study respondents at all supply chain levels explained contingent CSFs in sub-supplier management and sustainable food
difficulties in interactions deriving from cultural differences supply chain settings.
amongst supply chain members. The cultural differences were Traditional SSCM literature reports critical factors (mainly
rooted to norm differences and included language, habits, or barriers) from the perspective of the focal firm. Thus, they are
values. Given the geographical restriction for cultivation, cultural commonly classified into internal and external critical factors
distance is given in the food chain. (Walker et al., 2008). This research extended the organizational
boundaries of past research and took a more multifaceted
“Communication difficulties and differing mentalities can be perspective by individually considering perspectives of the focal
major barriers.” (Allfood, Deputy General Manager) firm, suppliers and sub-suppliers to identify CSFs for sub-supplier
management. Responding to this, identified CSFs can be classified compliance throughout their supply chain including sub-
into: supplier need to take particular attention on the identified
CSF. For example, purchasing managers should consider these
focal firm-related (i.e. internal) CSFs (e.g. focal firm's supply- CSFs in any strategic sourcing decisions. Whereas specific
know-how), sustainability criteria included in supplier selection processes
relationship-related CSFs (e.g. trust between focal firm and give indication about supplier's current sustainability perfor-
direct supplier), mance, these identified CSFs provide the foundation for the
supply chain partner-related CSFs (e.g. sub-supplier's current subsequent potential to implement CSS at sub-supplier sites.
CSS compliance), or Furthermore, the CSFs can be handled as guidelines to assess
context-related CSFs (e.g. little cultural distance). the boundaries of sub-supplier management success.
Before starting any sub-supplier management initiative man-
Whereas internal CSFs can be directly influenced by the focal agers should be aware of the characteristic of each CSF for the
firm, other CSFs are not as easily observable (e.g. trust between specific situation. This awareness helps sourcing managers to
supplier and sub-supplier) much less measurable. However, hav- better align required resources for managing sub-suppliers, ulti-
ing recognized the importance of those CSFs for the effectiveness mately achieving higher success rates.
of sub-supplier management, a focal firm should be conscious of Potential food safety issues as well as other social and
these CSFs during any interactions with suppliers and sub- environmental misbehaviors in food supply chains pressure
suppliers. firms to achieve traceability throughout their supply chains
In fact, incorporating a “feasibility assessment” of sub-supplier upstream to the raw material (Maloni and Brown, 2006).
management practices into early stages such as selecting and Although food supply chains seem to be less complex compared
segmenting suppliers is important for organizations seeking to to other industries (e.g. automotive or aerospace), the difficul-
diffuse sustainability standards throughout their supply chains. ties in achieving traceability was highlighted in this study. In
This situation is unlike other business performance aspects such as many cases traceability is not fully achievable even though food
delivery reliability, quality, and cost, where the focus can be safety regulations (including traceability requirements) exist
almost entirely on the immediate supplier, who will have to worry (Berman and Swani, 2010; Hamprecht et al., 2005; Roth et al.,
about economic and market factors and focus on those concerns. 2008). Traceability challenges are particularly linked to sub-
Sustainability activities are typically voluntary and organizations suppliers. These research findings provide additional guidance
(suppliers) may not have the same motivation or expertise in on what factors should be considered and might be particularly
diffusing these typically voluntary and very difficult to measure important in managing sub-suppliers in food supply chains to
outcomes. increase transparency and sustainability.
In the initial literature review unique challenges of sub- There are a number of general CSF managerial implications,
supplier management compared to “traditional” supplier manage- each specific CSF will have its own implications as well, this
ment were discussed. The identified CSFs and their subsequent research only presented a broad-brushed set of implications based
classification further underline important differences. That is, both on the theory of critical success factors.
relationship-related CSFs and supply chain partner-related CSFs
contain concepts that make an explicit distinction between sup-
pliers and sub-suppliers—a distinction that is not typically neces- 7. Conclusions
sary or evident within a “traditional” dyadic context.
Expanding the theory of critical success factors to strategic This paper focused on a study for the identification of critical
supply chain management and especially sustainable supply success factors (CSFs) for managing sub-suppliers within sustain-
chain management can provide many benefits to organizations able supply chain management (SSCM) settings.
and their supply chains. Some of the critical success factors Based on this year-long field study in two food supply chains,
identified in this study will require significant development and the research identified 14 CSFs that eventually influence the
effort. The gained insights also note that CSFs are interrelated. In success of the sub-supplier management outcome, reflected by
many cases the respondents would discuss a number of factors sub-suppliers' compliance with corporate sustainability standards
jointly. Thus, a relatively complex web of interactions is observed. (CSS). For each CSF, a foundational definition and analysis with
This is not surprising since internal CSFs and external CSFs can respect to the existent literature was provided. CSFs' unique
have a more complex set of interactions than a simple two importance to sub-supplier management success was highlighted
category grouping. Arriving at the four dimensions above further and exemplified by field study insights and comments from
exemplifies the additional levels of CSF complexity that can be participants. Since not all CSFs were specific to the sustainability
investigated. Critical success factor theory of the firm should seek context, the research at hand might also contribute to other fields,
to examine these interactions as well as the direct influence of where sub-suppliers need particular attention such as quality,
the CSFs. inventory, or further risk management.
The theory of critical success factors observes that critical The theory of critical success factors provided an effective
success factors exist, further study is needed to further evaluate theoretical lens that set the foundation for this study. This
the relative success of these factors. Contingencies are also part of strategic theory can effectively be applied to projects and supply
the theory of critical success factors, whether CSS diffusion differs chains as observed in the findings. Thus, addressing this issue is an
and by how much from internal sustainability CSFs need to be important step in developing a stronger theoretical foundation for
evaluated. Whether CSS diffusion to sub-suppliers differs from multi-tier supplier management, especially for situations where
other non-CSS (e.g. quality, cost) management of sub-suppliers is sustainability strategy is important for supply chain versus supply
another general direction of research. chain competition.
To extend the organizational boundaries from dyadic con-
6.2. Managerial implications siderations between firms and direct suppliers, future research
needs further examination of, at least, triadic relationships
Our findings highlight CSFs' influence on the outcome of including sub-suppliers. Furthermore, this research observed
sub-supplier management in SSCM. Firms who aim for CSS several important inter-relationships between CSF. These inter-
relationships of CSFs will need further investigation, from What enables you to manage sub-suppliers?
multiple organizational perspectives. Future research can In which situation do you not have any control of your sub-
investigate how these inter-relationships could be structured suppliers?
and further evaluated to provide managers better guidance What are factors allow you to develop your sub-supplier?
how to influence CSFs and to highlight potential synergies (Fu What additional factors make it challenging or even impossible
et al., 2012). Performance measuring approaches for CSFs need to assess or collaborate with sub-suppliers?
further examination. Whether the identified CSFs are actually What do you further consider as particularly important to
CSFs and prioritizing them also requires additional investiga- manage sub-suppliers successfully?
tion. Consideration of the CSFs in a longitudinal temporal
process that includes supplier selection and segmentation,
managing relationships, and supplier development over time, Questions asked to the direct supplier
are all areas for further sub-supplier management research.
That is future research should consider the dynamic role of Which social and environmental corporate sustainability stan-
CSFs in a longitudinal study (Lambert and Schwieterman, 2012; dards are required by your direct customers? Are these stan-
Rezaei and Ortt, 2012). dards understandable, and practicable for your producing
Whereas the current research explored CSFs that are important region (e.g. required terms of working, minimum wage) and
for managing sub-suppliers within SSCM from a general perspec- for the one of your supplier?
tive, another interesting research direction would be to examine Do you support customers in their sub-supplier management
the influence of these CSFs on specific sub-supplier management initiatives? Please explain.
elements and to measure the respective performance outcomes. Do your customers know your suppliers (i.e. their sub-suppli-
One such specific area is the potential for additional research ers)? Please explain.
examining sub-supplier development that builds on and extends In which situations are you willing to disclose your suppliers
the general supplier development literature its various research and in which not?
dimensions (e.g. see Krause, 1997). Please explain the relationships to your customer and supplier
Limitations of this field study are self-evident. The observations for the respective situations.
and findings are limited to two food supply chains. Further field What are reasons for giving your customers access to your
studies may take place within differing industries and include suppliers?
companies with other characteristics in terms of sizes and In situations in which you disclose your suppliers and allow
resource levels. A subsequent large-scale quantitative (empirical) access to them, what factors might enable or hinder your
research approach will help to validate and generalize the present customers' success in managing these suppliers?
research findings. Scales for evaluating the existence of these CSFs What are the prerequisites?
would need to be developed and tested in these broader study How would you describe your role within your customers' sub-
scenarios. Given that this is one of the first studies to investigate supplier management approach?
sustainable sub-supplier management in any industry, there is
clearly significantly more research required to further understand
the phenomena. This study sets the foundation for many possible Questions asked to the indirect sub-supplier
directions of future research.
Which social and environmental corporate sustainability stan-
dards are required by your direct customers (or customers'
Acknowledgments customers)? Are these standards understandable, and practic-
able for your producing region (e.g. required terms of working,
This work was supported by a mobility fellowship from the minimum wage)?
Swiss National Science Foundation (SNSF) for young researchers. In general, are you willing to cooperate with a focal company
The initial data collection took place within a CTI-funded (Swiss (your customer's customer) in terms of sustainability compli-
Commission for Technology and Innovation) applied research and ance? Please explain.
development project setting. Furthermore, we would like to thank Under which circumstances are you willing to collaborate with
Kevin Sammer for his great contribution to the data collection and a focal company which requests your compliance with its social
analysis and environmental corporate sustainability standards? What
kind of collaboration do you accept (e.g. self-assessment ques-
tionnaire, informal site-visits, audits, etc.)? What are reasons
Appendix A. Interview guideline for the identification of not to cooperate with a focal company?
critical success factors Do you insist on the involvement of your direct customer in this
context? Please explain.
Questions asked to the focal firm In the case you are willing to cooperate. What are critical
factors: (1) which hinder/complicate the implementation of
Which social and environmental corporate sustainability stan- social and environmental corporate sustainability standards
dards do you require from your suppliers and sub-suppliers? during the collaboration? (2) which enable/promote the colla-
Are you aware of all your sub-suppliers? If not, what are boration performance?
challenges? Could you describe the relationship between you and your
Which sub-suppliers do you know, which not? Why? direct customer for both: (1) a case in which you are willing to
In which situation do your direct suppliers disclose their own cooperate with the focal company and (2) a case in which you
suppliers (i.e. your sub-suppliers)? And in which situation they are not?
do not? In case of any identified non-compliance with a social and
What barriers do you face, when you seek to approach upper- environmental sustainability standard at your company: Do
tier sub-suppliers? you take counter-measures, responding to focal company's
In which situation are you able to assess your sub-suppliers? requests? Please explain.
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Int. J.

Production Economics ∎ (∎∎∎∎) ∎∎∎–∎∎∎

Contents lists available at ScienceDirect

Int. J. Production Economics

Critical factors for sub-supplier management: A sustainable food

1. Introduction demonstrated how ﬁrms' brands can suffer from non-compliant

0925-5273/$ - see front matter & 2014 Published by Elsevier B.V.

Critical factors to SSCM Sources

Internal critical factors

External critical factors

Role The chocolate/sugar supply chain The fruit/juice supply chain

Focal ﬁrm Maestrani Obermeilen

Project members/informants: Project members/informants:

Direct supplier ZMR Allfood

Project members/informants: Project members/informants:

Indirect sub-supplier ZAF Capricorn

Project members/informants: Project members/informants:

collaborative, ﬁeld-based interactions, two rounds of semi- 4.3. Data analysis

Maestrani ZMR ZAF Obermeilen Allfood Capricorn

CSF1 Trust between focal ﬁrm and direct supplier X X X X

“(…) we insist on the involvement of our direct customer. We are

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