A Sustainable Supply Chain Management Framework for Tour Operators

A Sustainable Supply Chain Management Framework for Tour Operators

roo fs

Karen Schwartz Christel DeHaan Tourism Travel Research Institute, Nottingham University Business School, Nottingham, NG8 1BB, UK

Un co rre cte dP

Richard Tapper Environment Business & Development Group, Kingston-upon-Thames, KT2 6DD, UK and International Centre for Responsible Tourism, Leeds Metropolitan University, Leeds, LS1 3HE, UK Xavier Font International Centre for Responsible Tourism, Leeds Metropolitan University, Leeds, LS1 3HE, UK This paper presents a framework for tour operators to use in the implementation of supply chain management processes to improve sustainability performance. This is critical for a sector that historically has treated impacts as externalities and suppliers as commodities, and in which recent sustainability actions have been informal or ecosavings led. This framework is part of the outcome from the EU-funded ‘Travelife’ programme, which is a joint initiative from European tour operator associations and sustainability standard-setting stakeholders. The framework has been designed as a series of industry-relevant steps: engaging the business and setting policies, integrating sustainable supply chain management (SSCM) into the business, assessing suppliers, setting priorities for actions and evaluating progress. The discussion here considers current tour operator approaches to sustainability, how the framework may be implemented by specialist and mass-market operators and the challenges faced if these early steps are to lead to widespread, full implementation of SSCM initiatives.

doi: 10.2167/jost785a.0

Keywords: tour operations, sustainable supply chain management, corporate social responsibility

Introduction

The tour operating industry is changing faster than any other sector in tourism; the growth of low-cost airlines, Internet-based travel companies and independent travel has led to an increasingly competitive market place. Strategic development requires added value and differentiated products (Mintel, 2006a), which can be achieved through developing product sustainability. Several European tour operator associations have proposed industrywide actions to gradually internalise sustainability, with the potential to be used in the best of C

0966-9582/08/00 001-17 $20.00/0 JOURNAL OF SUSTAINABLE TOURISM

1

2008 K. Schwartz et al. Vol. 00, No. 0, 2008

2

Journal of Sustainable Tourism

Un co rre cte dP

roo fs

the cases as a competitive advantage tool, or in the worst of the cases as a means of risk management and regulation avoidance. These initiatives follow on from the ground breaking work of the United Nations Environment Programme, the ‘Tour Operators Initiative for Sustainable Tourism Development’ (TOI), which engaged international tour operators in the identification of five areas in which to integrate sustainability into business: product design and management, supply chain management, internal management, communication with customers and cooperation with destinations. While all five are clearly inter-linked, the TOI early on decided to pay special attention to supply chains, since this is where most of the impacts take place (Font & Cochrane, 2005a, b). SCM can be defined as ‘a philosophy of management that involves the management and integration of a set of selected key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders through the collaborative efforts of supply chain members’ (Ho et al., 2002: 4422). SSCM adds sustainability into supply chain management (SCM) processes, so that these also consider the environmental, social and economic impacts of business activities. In tour operations, this relates to the development of operator-purchasing policies and practices that positively contribute to supplier sustainability, and at the same time, improve the quality of the products and services offered. This is not straightforward, since tour operators’ supply chains are diverse and fragmented, including accommodation, transport, excursions/activities, food and craft and other ancillary services. At times, manufacturing, and to a lesser extent the service sector, have internalised the impacts of the supplier into the production process. This initially focused on environmental impacts that led to lean manufacturing, and less often, on social impacts that enable companies to claim environmental friendly, organic or fair trade products (Drumwright, 1994; Kassinis & Soteriou, 2003; Quazi, 2001; Wilkinson et al., 2001; Williamson & Lynch-Wood, 2001). After all, a company is only as sustainable as its suppliers are. However, this is not an issue that tour operators have looked at in much detail. This is due to the multitude of small suppliers under different national legislations, the challenges in measuring sustainability in the service sector and the lack of tangible evidence that addressing this issue would lead to greater willingness by customers to purchase or to pay. ‘Travelife’ is the name of a three-year EU LIFE-funded programme to introduce sustainability criteria into the supply chain of European tour operators and to provide a market-based regulation of sustainability ecolabels. The programme has developed the SSCM framework outlined here, backed with sustainability assessments, training, action planning and reporting tools, and one single set of sustainability criteria to be used by all tour operators. Key industry partners are the UK Federation of Tour Operators (FTO) in association with the Dutch Association of Tour Operators (ANVR). They were joined later by the Association of Belgian Tour Operators (ABTO) and the German Forum Anders Reisen (FAR), and with interest shown by the Italian Tour Operator Association (ASTOI) (see Travelife, 2006a). This paper furthers previous research which addressed tour operator attitudes and business approaches towards destination sustainability (Budeanu, 2005; Carey et al., 1997; Curtin & Busby, 1999; Forsyth, 1995, 1997; Holden, 1996;


3

Un co rre cte dP roo fs

Kalisch, 2002; Klemm & Parkinson, 2001; Miller, 2001; Tapper, 2001; Wearing & McDonald, 2002; Welford et al., 1999), the characteristics of specialised businesses with a focus on sustainability (Curtin & Wilkes, 2005; Fennell & Malloy, 1999; Herremans & Welsh, 1999; Sasidharan et al., 2002; Sirakaya & McLellan, 1998; Wearing & McDonald, 2002), eco-tour guide training (Black et al., 2001; Weiler & Ham, 2002) and the influence of green consumerism on operator sustainability practices (Miller, 2003; Weeden, 2001). Recent research has also begun to address operator approaches to environmental management (Herremans et al., 2005) and the role of tour operator associations in developing a common approach to sustainability management (Tepelus, 2005; Van der Duim & Van Marwijk, 2006). The emergence of SSCM in tour operations was first addressed by Tapper (2001) and later detailed in a categorisation of cases per type of supplier reported by Font et al. (forthcoming). Future papers will detail current research by the authors (see Schwartz & Font, 2005), which analyses current SSCM practices and makes recommendations for its ongoing development. Essentially, research to date has identified that, while there are a wide range of examples of good practice across the industry, there is considerable opportunity for more operator-led initiatives and more widespread activity. This corresponds with an increasing focus on SSCM at both an individual company level and through trade associations. The following discussion explains the development of this framework and presents each step. This highlights the current understanding of tour operator attitudes towards SSCM, and the opportunities and challenges facing the industry.

The Emergence of Sustainable Supply Chain Management in Tour Operations As intermediaries in the travel distribution system, tour operators control the market place through directing tourist flows. The resultant purchasing power of tour operators in supplier relationships has been well documented. In particular, studies by Buhalis (2000) and Bastakis et al. (2004) have highlighted how an imbalance of power in these relationships has in cases led to conflict between operators and suppliers. These issues are of critical importance in developing an understanding of current and potential approaches to SSCM, which may take either a collaborative, or an enforcement-based approach. Previous research has identified that operators do not always take a long-term view of destination development and they may claim to lack control over impacts in destinations (Carey et al., 1997; Curtin & Busby, 1999; Forsyth, 1995; Klemm & Parkinson, 2001; Miller, 2001; Tapper, 2001). However, the last decade or so has witnessed tremendous change in the business and regulatory environment, which has placed corporate social responsibility firmly on the business agenda (Cramer, 2005), and tour operations are no exception. A basic distinction can be made between ‘specialists’ as small operators with less than 50 full-time staff that market their products directly, and ‘mass-market’ operators as the vertically integrated companies that retail through travel agencies. Broadly speaking, mass-market operators offering mainstream packages have not traditionally considered sustainability in business processes in the

4


Un co rre cte dP

roo fs

same way as specialist operators that sell ‘authentic’ products. However, the market place is changing rapidly and the activities of operator associations are testament to the increasing profile of sustainability as an industrywide management issue. The Association of Independent Tour Operators (AITO), which represents independent, specialist operators, has actively encouraged sustainability improvements among its members through a well-established responsible tourism award scheme. More recently, the Federation of Tour Operators (FTO), which represents the largest UK operators, has required its members to make a formal commitment towards sustainability. This represents a key shift in the traditional activities of the mass-market sector, which has been widely criticised for ‘lacking sustainability’ (Butcher, 2003). The mass-market industry is characterised by more standardised products, whereby purchasing choice is driven by the features of the accommodation and services provided. However, several studies have shown that consumer interest in the sustainability of holiday products is a growing area of concern, although this interest is not reflected in actual purchasing decisions (Mintel, 2003; Mori, 2000; Tearfund, 2001). This, in addition to the growth of niche market products (Mintel, 2006b), has led to the purchase of specialist brands by mass-market operators. Sustainability issues in the travel industry are increasingly coming under public scrutiny, attracting the attention of financial markets and becoming subject to increasing legislative requirements (Miller & Twining-Ward, 2005). For tour operators in particular, the management of supplier performance is especially critical, since customers rarely differentiate between the activities of an operator and its suppliers. In addition, in the European Union, the EU Package Travel Directive places legal liability on tour operators for the performance of their suppliers. Furthermore, aspects of sustainability, such as environmental management are integral to health and safety management, and international legislation addresses socioeconomic concerns, such as setting core labour standards. It is apparent, therefore, that sustainability is not to be seen as a ‘luxury’ or an ‘altruistic motive’, but a key issue in quality management, in which specialist and mass-market operators face diverse opportunities and challenges.

Sustainable Supply Chain Management Theory and Applications SCM is the process through which a buyer works with their suppliers to ensure that products and services are procured in ways that meet the buyer’s specifications. It includes product design, planning, operations, logistics, delivery, as well as payment and contractual procedures. It first focused on quality aspects, and later was broadened to include environmental issues in order to improve eco-efficiency and reduce waste, as part of the implementation of lean production systems. To do this, buyers began informing suppliers on how to be more eco-efficient in order to control production costs. A number of scandals and public campaigns about food, timber and clothing sourcing have led international brands to pay attention to the origin of their raw materials and productions systems for reputation reasons. This has led to the development of SSCM as a field of practice. In tour operations, this brings environmental and socioeconomic considerations into supplier management processes, including considerations relating to energy and waste management, conservation of nature and heritage,


5

Un co rre cte dP

roo fs

preservation of cultural identity, respect for local communities and contribution to economic development in destinations (TOI, 2004). This is implemented not just as a cost reduction strategy, but to also protect brand reputation and to address corporate social responsibility. Although there is a wide body of literature concerning the application of SSCM to manufacturing and electronics-based industries (see, for example, Handfield et al., 2005; Vachon & Klassen, 2006; Zsidisin & Siferd, 2001), it has not yet been considered in the tourism literature. To date, specialist companies have treated sustainability as a quality-related issue and it has only recently been addressed more widely by the mass-market sector. However, the indications are that this is changing. The engagement of these key market players, which collectively account for 65% of package holiday sales in the UK (Mintel, 2005), could be very significant in terms of raising awareness among consumers, and this in turn may instigate market demand for evidence of operator commitment to sustainability issues. Generally, specialist and mass operators have different potential for addressing SSCM due to their size and type of operations. The approach taken to SSCM is therefore, likely to differ both across and within sectors, depending on individual business characteristics, and particularly on the nature of operator–supplier relationships in terms of the relative formality and stability in purchasing and contracting decisions. These factors will influence the type of SSCM activity that companies engage in, which can vary from informally discussing sustainability issues with suppliers, through to more resource intensive activities, such as developing assessment procedures and guidance materials. Currently, there is more evidence of good SSCM practice in relation to environmental, rather than socioeconomic issues. For example, TUI ATG, LTU Touristik, My Travel Northern Europe and Hotelplan (four large European tour operators) have developed environmental manuals for suppliers and have carried out assessments, with an emphasis on water/waste/energy eco-savings (TOI, 2003) that can reduce costs to the supplier. By contrast, most socioeconomic performance measures have been perceived to potentially increase costs, to be more difficult to influence and assess, and some in the sector have argued that labour aspects of socioeconomic performance are, or should be, addressed through labour legislation (Font & Harris, 2004). However, it can be suggested that as industry associations develop and provide appropriate measurement criteria in supplier assessment tools, increased attention will be given to socioeconomic issues (see FTO, 2006b; TTF, 2005a, b). Supplier assessments currently focus on accommodation and excursion/activity providers (see step 4 of the SSCM framework below), but they can be adapted to address a wider range of suppliers. The focus on accommodation and excursions/activities reflects both the importance of these package components in purchasing decisions and also a perceived greater level of influence on these suppliers in comparison to sectors, such as transport, or suppliers further down the chain, such as food and craft providers. Three conditions are necessary for SSCM: long-term partnership, fair pricing and a consistent volume of operations (Font et al., forthcoming). Characteristics of the tour operating industry, such as high levels of price competition, fluctuating market demand, and a possible short-term outlook to business relationships, pose a considerable threat to engagement in SSCM. Mass-market


6

Un co rre cte dP

roo fs

operators are reported to operate on profit margins of only 2–3% (FTO, 2006a), and the resultant pressure on suppliers to reduce prices has already been shown to limit supplier capacity to invest in quality improvements (Bastakis et al., 2004; Buhalis, 2000). In consequence, the implementation of SSCM is challenged by financial, operational and human resource capacity limitations faced by tour operators, both internally and in supplier operations, and by price sensitivity in the consumer market. It is therefore, likely that in the medium term at least, costs, facilities and service levels will be given priority over sustainability criteria in purchasing decisions by tour operators. Furthermore, if significant investment is to be made, the full implementation of SSCM requires the development of trust between partners. To promote SSCM, priority therefore needs to be given to establishing a robust business case for investment in sustainability initiatives in both operator and supplier businesses. This in turn requires greater engagement in sustainability initiatives, so as to identify the business benefits. The development of practical management tools, such as the SSCM framework described here, can support this and drive forward industry practice. In parallel, there is also a need to raise awareness among consumers on both sustainability issues and on actions the industry is taking. A focus on added value through sustainability measures in order to overcome the challenges of low-cost competition (especially in mass-market products) is essential. There is evidence of an increasing industry momentum in addressing sustainability issues and this is likely to gather pace. This reflects a preference by the industry to address sustainability issues in advance of any possible regulatory requirements (Mintel, 2005) and a recognition that common problems require shared solutions. Bringing such a diverse industry under a shared sustainability agenda is not without challenge, but it offers advantages at destination, business and consumer levels. In an industry that is characterised by the importance of a good reputation and avoidance of negative publicity, it is reasonable to suggest that companies that proactively drive forward sustainability practices have most to gain.

Methodology

The SSCM framework was developed in three phases: conceptual development, stakeholder consultation and phased-pilot implementation. The conceptual development is the result of rationalising the many layers of operators’ and associations’ independent initiatives into a joint, agreed and shared process. The tour operator associations engaged in Travelife had undertaken various initiatives in the past, so members were at differing stages in addressing sustainability, and they represented diverse operators in terms of company size and product offerings. Therefore, agreement needed to be reached on both the content of the framework and the order in which the steps should be set out. It was also necessary to ensure that the framework could be feasibly followed by operators and had global applicability. The structure of this framework is based on the well-known Deming Cycle of ‘plan-do-review’, which is used for the development of quality and environmental management systems, and applied through ISO9001 and 14001 standards. Several tour operator associations had developed parallel systems since around


7


the year 2000. The Association of Independent Tour Operators (AITO) in the UK and Forum Anders Reisen (FAR) in Germany prepared codes of conduct and monitoring systems that focused mainly on actions rather than processes, while the TOI (see TOI, 2004) prepared a more generic system for all tour operators linked to performance indicators as part of the Global Reporting Initiative’s sustainability reporting guidelines (see GRI and TOI, 2002). At the same time, in the Netherlands, ANVR brought in a series of environmental requirements that focused on supplier actions and less on processes than is the case for TOI (see Van der Duim & Van Marwijk, 2006). By 2004, the FTO had translated the Dutch materials, introduced social aspects and proposed a process-based ‘Integrated Responsible Tourism Programme’, and both the FTO and ANVR had joined a partnership with two ministries of environment, two universities and two NGOs forming a consortium that was awarded EU funds for the Travelife project. Consultation concerning the SSCM framework took place during meetings between industry associations and key tour operators; these meetings are used to plan, design and query the development of this initiative. Six months were dedicated to plan the framework, to audit over 40 tour operator practices, to test the practical feasibility of the framework and to provide illustrative cases (see Schwartz & Font, 2005). Documented outcomes were also proposed for each step in order to monitor progress (see Table 1). Subsequently, a three-day meeting in 2005 was dedicated to test the ‘political feasibility’ of the framework. This was attended by responsible tourism officers from large tour operators (four UK, one Dutch and one Belgian) and from two small tour operators (one German and one Dutch), as well as by the responsible tourism coordinators from FTO, ANVR, FAR and ABTO. Feedback was also provided by AITO. This was a typical stakeholder consultation process with background documents which compared different SSCM methodologies, both generic and those used in tour operating, and which provided recommendations for discussion broken down into agenda items. The workshop participants agreed the elements of the SSCM framework and proposed changes building on the background documents, and these were then passed to the project consultants, who integrated them into summary and operational versions of the SSCM framework. The main changes requested by workshops participants at this stage were that the SSCM framework should not directly require operators to implement prescribed steps for providing support to suppliers and providing incentives or to give preferential contracting deals to sustainable suppliers. These changes primarily reflected concerns amongst operators regarding limitations in resource and purchasing capacities, and their preference to provide a lowest common denominator that all the associations could agree to. The rationale for this was that individual associations could then promote higher standards (although, in practice, this has not happened as of November 2007). The implementation process can only be described as phased due to the need to coordinate actions between national tour operator associations that inevitably work at differing paces, and because of changes in the staff that championed sustainability at association level in the Dutch and Italian associations. Additionally, there were some struggles among several associations to gain mandates to promote sustainability (the account by Van der Duim & Van Marwijk, 2006,


8

Table 1 The implementation process as deliverable outcomes for monitoring

Step 1. Engage your business

Appointment of a sustainable tourism representative, create goals, promote dialogue on the issues

Large and medium tour operators Initial implementation

Full implementation

roo fs

Small tour operators implementation

Appointment of a sustainable tourism representative and management team, create goals, communicate business benefits to employees, directors and shareholders

Un co rre cte dP

Supply chain management framework

Training for the sustainable tourism management team, with this cascaded down

Step 2. Create a policy for SSCM

Written SSCM policy document

Written SSCM policy document

Refined SSCM policy document

Step 3. Integrate your SSCM policy into your business

Identification of how SSCM procedures can be integrated into job roles

Review of job/role specifications, role profiles and working procedures

Investment in a sustainability management system

Step 4. Conduct a baseline assessment of suppliers

Evidence of use of assessment system (including informal systems) for suppliers

Use of formal assessment system (checklists, etc.) for some suppliers/in selected pilot destinations

Use of formal assessment system (checklists, etc.) for all suppliers

Step 5. Prepare and implement an action plan

Evidence of actions to implement the company’s SSCM policy (including relevant internal management, staff training and customer communications)

Written action plan with clearly identified priorities for implementation of the company’s SSCM policy (including relevant internal management, staff training and customer communications)

Refined action plan with clearly identified priorities for implementation of the company’s SSCM policy (including relevant internal management, staff training and customer communications)

Step 6. Monitor and report on progress made

Evidence of monitoring of progress (including use of informal systems and feedback from tour leaders, etc.)

Use of formal monitoring system (checklists, etc.) for some suppliers/in selected pilot destinations

Use of formal monitoring and reporting system (checklists, etc.) for all suppliers, combined with some independent review

C Source: Adapted with permission from Richard Tapper, 2006


9

roo fs

is particularly illustrative). The three years of Travelife as an EU project have been a constant, but slow process of training staff in each tour operator to be sustainability auditors, and developing a joint online database for shared sustainability assessments for suppliers, alongside an online training and reporting tool for tour operators. The phasing was also influenced by the requirements of EU reporting dates and group periodic meetings. The SSCM framework The six steps of the SSCM framework form a cycle of continual improvement based on setting policies, goals and objectives, assessing supplier performance, setting priorities for action and evaluating progress.

Un co rre cte dP

Step 1: Engage the business The first step is to engage a management team in setting the SSCM goals, which can then be cascaded further down the company. Top management support is built by presenting the business case, encouraging the open exchange of ideas, nurturing a new corporate culture based on the new ways of doing business and instilling a sense of ownership in a SSCM strategy (Friedman et al., 2000; Maxwell et al., 1997). It is recommended that a representative is appointed to act as the central coordinator for activities. This is already required by AITO, ANVR and FTO, but is generally a post with other responsibilities and with varying degrees of influence. In larger companies, it is recommended to establish a team representing a cross section of departments (for example, contracting, marketing, product development, operations and sales) to ensure that decision making is informed by inter-departmental operational procedures and capacities. Internal awareness raising is a current priority for mass operators to nurture commitment and over the longer term, to provide training at all levels of the organisation (Cramer, 2005). In particular, it is critical that commitment is gained at director level in order that time and resources are made available to implement initiatives. However, achieving this requires robust evidence of the business case for sustainability. Although some specialist operators were established on sustainability principles, expertise and commitment varies, while their relatively informal management structures influence how sustainability is communicated to employees and customers. Trade associations play a key role in developing the knowledge and expertise to implement sustainability initiatives and have the potential to be a driving force in engaging the industry and setting targets for sustainability performance. However, the vested interests of associations may act to limit the level at which performance requirements are set (Clarke, 2004; Mowforth & Munt, 2006). Step 2: Create a policy for SSCM Policy creation is an important step in formally outlining company values and providing strategic direction (Handfield et al., 2005; Herremans et al., 2005; Preuss, 2005). Effective and systematic SSCM practices start with clear policy goals and feed into a plan of action. Specific goals will differ according to individual companies’ visions of sustainability, their size and related resources,

10


Un co rre cte dP

roo fs

the nature of their products and destinations, their prioritisation of impacts and their relative capacities to address impacts. Policies may therefore, include the development of new products, working procedures, communication tools, or activities focused on managing environmental, socio-cultural or economic aspects of operations. AITO, FTO and ANVR require their members to produce such policies, and all ANVR members must display them in their brochures and website. This is positive, but to date, most of them lack committed statements regarding SSCM. It is important that the promotional opportunities associated with policies are not confused with their primary function, which is to set out company goals and direct the nature of their engagement in sustainability initiatives. Indeed, recent research into reporting practices of large international tour operators notes that ‘tour operators are prepared to write about their efforts to make tourism more sustainable, but when it comes to specification of the initiatives, monitoring and compliance, the industry remains vague at best, (Van Wijk & Persoon, 2006: 392). It is also critical that they go beyond environmental criteria to address socioeconomic concerns (Kalisch, 2002). Over time, it is suggested that policies should be tied into monitoring systems in order to maximise their effectiveness (Sethi, 2002) and to address criticism of ‘green-washing’.

Step 3: Integrate SSCM into the business SSCM requires a clear definition of job responsibilities across the company, along with associated new company procedures and training requirements. For example, contractors may be required to incorporate sustainability criteria in their purchasing decisions, destination representatives to disseminate sustainability information to suppliers, marketing departments to promote sustainability initiatives and quality/health and safety departments to incorporate sustainability issues into supplier assessments. Smaller operators are likely to have less distinct departmental roles and formal job specifications, and to address training needs informally. Conversely, mass-market operators have considerable opportunity to integrate sustainability issues into existing management processes, such as health and safety, quality and training. Travelife provides an online training and action planning tool for all staff (see Travelife, 2006a), while the FTO has commissioned the development of professional qualifications in responsible tourism for staff. The implementation of SSCM may also require development of organisational programmes, such as reward systems, communication tools and training programmes, in order to build employee awareness and commitment at all levels (Crane, 1997; Madsen & Ulhøi, 2001; McDonald & Nijhof, 1999). This can begin during staff recruitment, by employing individuals whose values match those of the company (Herremans et al., 2005). However, the overall potential of tour operators to address SSCM is also dependent on the financial and resource capacities of their suppliers’ for implementation of sustainability actions, and on the nature of the operating conditions in destinations in terms of the infrastructure provision and regulatory conditions. It is therefore, critical that supplier capacities to invest in sustainability are considered when establishing sustainability-related goals and activities.


11


Step 4: Conduct a baseline assessment of suppliers An assessment of suppliers’ current sustainability performance is necessary in order to design an action plan and also to measure progress over time (Prahinski & Benton, 2004). Due to the large number of suppliers in different destinations, assessments will often need to be phased-in, and to give priority to key impacts, destinations and product or supplier types. Accommodation and excursion providers are generally addressed first, in part because accommodation is the key to all packages and because it is more tangible and easier to measure. Excursion providers prioritised so far, are wildlife and captive animal attractions and marine recreation providers, due to both the obvious negative impacts on the animals and habitats, and because they are emotive issues. To conduct baseline assessments of suppliers, operators can either develop internal assessment systems or adopt those developed by trade associations. For specialist products that rely on natural environments and ‘authentic’ cultures, sustainability is sometimes considered as integral to informal operator–supplier communications on product management. However, more formal assessment and monitoring systems can be useful tools for even the smallest businesses and could be approached on a selective basis (Tapper, 2001). A number of massmarket operators have begun to distribute assessments and codes of practice to their suppliers, which they can self-complete online through the Travelife website, and they are then verified by either a tour operator or external consultant (see Travelife, 2006b). Assessments are also being carried out by health and safety auditing staff trained on sustainability assessments or by suitably qualified third parties. A benefit of this web-based tool is its electronic storage and feedback capabilities. This is also central to the funding of the programme, which is based on the promotion of local suppliers. Suppliers receive automated feedback on the assessment results, along with links to local businesses, which can supply the materials/services required to implement improvements. However, it remains to be seen whether operators engage in more personalised feedback processes with their suppliers. This is integral to assessment processes in order to build commitment, cooperation and understanding (Lamming & Hampson, 1996), but is likely to be challenged by the commercial pressures of the tour-operating environment. Step 5: Prepare and implement an SSCM programme and action plan An SSCM programme of work sets out details on how to achieve the company goals identified in the policy setting step (Step 2), based on the information drawn from supplier assessments conducted in Step 4. It is suggested that at least, one action is set for each part of the supply chain (i.e. accommodation, transport, excursions/activities, ground handlers/in-bound agents), in line with ANVR’s current practices (see Van der Duim & Van Marwijk, 2006). Specific tasks can then be assigned to implement these actions, such as developing internal SSCM management processes, customer communications and for working with suppliers. This might include raising awareness about sustainability issues, providing technical support on sustainability improvements, offering recognition to sustainability suppliers and/or integrating sustainability criteria into suppliers’ contracts.

12


Un co rre cte dP

roo fs

Sustainability actions can be prioritised according to the characteristics of both operator and supplier businesses. For instance, specialists generally perceive a greater potential to influence the environmental performance of excursion/activity providers, since they represent a key part of the product, and tour leaders can play an active part in demonstrating environmental practices, such as proper waste management and disposal. Accommodation is commonly a key focus for mass tourism operators, and the large-scale nature of many of their suppliers potentially helps with implementation of environmental and sustainability improvement actions. Taking into account that it is the supplier who makes the investment for the improvements, a mix of actions is generally promoted, combining cost-saving actions (e.g. on water and/or energy efficiency and on waste management) with actions on the environment and labour conditions that may require higher operating costs, or have longer or less obvious returns on investment. To implement sustainability actions, suppliers may need support and training. Some large companies already provide this and industry associations and destinations can provide additional support. For example, the FTO has run sustainability road shows for suppliers in Egypt, Turkey and Spain, explaining the assessment process and the Travelife self-help tools. The Catalan Environmental Agency, which certifies environmental ecolabels, and which participated as a partner in the Travelife together with the Catalan Tourist Board, have set themselves the task of making Catalonia the destination with most Travelife logos with UK and Dutch tour operators, as part of their ‘Catalonia is Quality’ campaign. Provisions of incentives for suppliers who implement effective sustainability actions are also an important part of SSCM programmes. Travelife has developed a sustainability classification system based on verified sustainability improvements and sustainability assessments. This features a bronze, silver or gold classification (with plans to introduce a further platinum grade). The operator ‘First Choice’ (now part of TUI Travel PLC) has featured accommodation suppliers which have received a classification in selected 2008 brochures, while other operators are also implementing this approach. This represents a significant step forward in mass-market operators’ approaches to SSCM.

Step 6: Monitor and evaluate the SSCM programme and report on progress made Monitoring and evaluation through some type of reporting system is a vital component of SSCM, since it demonstrates to all the stakeholders how the policy and programme of work is being implemented, the results produced and the degree to which goals have been reached (Krause & Ellram, 1997). This enables reflection on progress in order to better understand the factors that assist or hinder implementation of sustainability actions, and to incorporate these into future business decisions (Carbone et al., 2005; Welsh & Herremans, 1998). Travelife’s central data management system for the supplier sustainability assessments (see Travelife, 2006b), coupled with each tour operators’ confidential analysis comparing bookings/yield/satisfaction of accommodation suppliers with different levels of sustainability performance, can also help operators to plan future SSCM actions. Mass-market operators commonly produce annual reports and reporting on sustainability activities can be integrated into these to


13

Un co rre cte dP

roo fs

communicate progress. It can be considered encouraging that one UK operator has already produced a dedicated report on corporate social responsibility practices as part of its operational and financial review (First Choice, 2005, 2006). Full reporting is only likely to develop over time, since it is a relatively resource-intensive activity and companies are naturally wary of detailing activities that may lead to public scrutiny (Hall, 2000). Furthermore, some specialists may continue to prefer more informal evaluations through internal dialogue based on tour leader and/or customer feedback, and may not perceive a benefit in producing written reports. Van der Duim and Van Marwijk (2006) suggest that it could be beneficial for associations to set up meetings for operators to verbally report on performance. Whatever the approach taken, monitoring and evaluation systems are an integral part of an SSCM for all types of tour operators, and they can also provide a credible reporting system by which to gain reputational advantages from setting out SSCM achievements. Within the variety of formal or informal approaches that monitoring and evaluation may take, the commonality is the identification of successes and of difficulties in order to plan ongoing actions, and to raise stakeholder awareness of tour operators’ engagement in addressing sustainability.

Conclusion

Establishment of an SSCM framework and supportive tools at European level is a breakthrough for tour operations and has the potential to create a ‘ripple effect’ to promote practical sustainability management throughout the sector. The provision of clear guidance on how to approach SSCM enables companies gradually to implement actions from which expertise can be accrued through practical experience. Inevitably, many industrywide initiatives are slow to develop and are often driven initially by companies seeking to gain competitive advantage from ‘first player’ moves on issues, and also as attempts to avoid legislation by adopting voluntary initiatives. Competitive advantage is highly dependent on market trends and consumer attitudes towards sustainability, and pressures for legislation vary. Therefore, the extent to which the framework will or will not be used, and the degree to which the changes brought in due to this framework will contribute to a more sustainable supply chain, remain to be seen. Operators in specialist and mass-market sectors will progress at varying rates in their implementation of sustainability and this will also influence consumers and overall market trends. Furthermore, companies do not behave as homogeneous bodies, and while one department might introduce systems to measure and monitor sustainability, others may take actions that undermine sustainable behaviour: internal integration and awareness raising within companies, therefore, has a crucial role for implementation of SSCM. Having introduced a European-wide tool, developed with EU funding through Travelife to assess and classify supplier sustainability, the challenge for tour operator associations is to continue with this and to use their resources to promote widespread implementation of SSCM. Any serious attempt by a tour operator to improve sustainability requires implementing an SSCM framework, for most sustainability impacts take place in the supply chain. Critics will say that SSCM outsources the cost of being

14


Un co rre cte dP

roo fs

sustainable to the supplier, which is true if tour operators do not address in parallel their responsibilities through more sustainable product design, better internal management, communicating responsibly to consumers or collaborating with the destination (see Font & Cochrane, 2005a, b). Specialist and massmarket operators face differing SSCM opportunities and challenges, but they share the business benefits to be gained from wider recognition of developing more sustainable products. For mass-market operators, global attention to corporate social responsibility provides a fundamental driver to address the issues covered by SSCM, while specialist operators must maintain a differentiated product (often through sustainability) that enables business success in a niche market. For both groups of operators, SSCM is integral to product quality, and it has the potential to become a key selling point in an increasingly competitive and ever changing market place. Indeed, recent months have witnessed further consolidation in the industry through mergers between key mass-market players. It is the potential for added value that must be focused upon in developing evidence of the business case for operator engagement in sustainability. Current operator SSCM practices and the related outcomes must be further explored in order to contribute to better understanding of how the industry can develop to meet sustainability goals alongside financial and operational concerns. To address these needs, the framework presented here can be effectively applied to such research, through offering a tool to chart industry progress. In this sense, the SSCM framework can be seen as both an industry landmark and a research tool. Acknowledgements The authors would like to thank Chris Thompson (FTO) and other Travelife partners for their support. This project was possible through the kind financial contribution from the EU LIFE Programme. Correspondence

Any correspondence should be directed to Xavier Font, International Centre for Responsible Tourism, Leeds Metropolitan University, Leeds, LS1 3HE, UK ([email protected]). References

Bastakis, C., Buhalis, D. and Butler, R. (2004) The perception of small and medium sized tourism accommodation providers on the impacts of the tour operators’ power in Eastern Mediterranean. Tourism Management 25, 151–170. Black, R., Ham, S. and Weiler, B. (2001) Ecotour guide training in less developed countries: Some preliminary research findings. Journal of Sustainable Tourism 9 (2), 147–156. Budeanu, A. (2005) Impacts and responsibilities for sustainable tourism: A tour operator’s perspective. Journal of Cleaner Production 13, 89–97. Buhalis, D. (2000) Relationships in the distribution channel of tourism: Conflicts between hoteliers and tour operators in the Mediterranean region. International Journal of Hospitality and Tourism Administration 1 (1), 113–139. Butcher, J. (2003) The Moralisation of Tourism: Sun, Sand . . . and Saving the World? London: Routledge.


15


Carbone, G., Font, X. and Tapper, R. (2005) Indicators for distribution channels: The Tour Operators’ Initiative for sustainable development. In G. Miller and L. Twining-Ward (eds) Monitoring and Indicators for Sustainable Tourism (pp. 261–280). Wallingford: CABI Publishing. Carey, S., Gountas, Y. and Gilbert, D. (1997) Tour operators and destination sustainability. Tourism Management 18 (7), 425–431. Clarke, J. (2004) Trade associations: An appropriate channel for developing sustainable practices in SMEs? Journal of Sustainable Tourism 12 (3), 194–208. Cramer, J. (2005) Company learning about corporate social responsibility. Business Strategy and the Environment 14, 255–266. Crane, A. (1997) Rhetoric and reality in the greening of organisational culture. In G. Ledgerwood (ed.) Greening the Boardroom (pp. 129–144). Sheffield: Greenleaf Publishing. Curtin, S. and Busby, G. (1999) Sustainable destination development: The tour operator perspective. International Journal of Tourism Research 1, 135–147. Curtin, S. and Wilkes, K. (2005) British wildlife tourism operators: Current issues and typologies. Current Issues in Tourism 8 (6), 455–478. Drumwright, M. (1994) Socially responsible organizational buying: Environmental concern as a non-economic buying criterion. Journal of Marketing 58, 1–19. Fennell, D.A. and Malloy, D.C. (1999) Measuring the ethical nature of tourism operators. Annals of Tourism Research 26 (4), 928–943. FirstChoice (2005) People and Environment Report. First Choice PLC. On WWW at http:// www.fcenvironmentandpeople.com. Accessed September 2005. FirstChoice (2006) People and Environment Report. First Choice PLC. On WWW at http:// www.fcenvironmentandpeople.com. Accessed November 2006. Font, X. and Harris, C. (2004) Rethinking standards from green to sustainable. Annals of Tourism Research 31 (4), 996–1007. Font, X. and Cochrane, J. (2005a) Integrating Sustainability into Business: A Management Guide for Tour Operations. Paris: Tour Operators Initiative for Sustainable Tourism Development. On WWW at http://www.toinitiative.org. Accessed November 2005. Font, X. and Cochrane, J. (2005b) Integrating Sustainability into Business: An Implementation Guide for Responsible Tourism Coordinators. Paris: Tour Operators Initiative for Sustainable Tourism Development. On WWW at http://www.toinitiative.org. Accessed November 2005. Font, X., Tapper, R., Schwartz, K. and Kornilaki, M. (forthcoming) Sustainable supply chain management in tourism. Business Strategy and the Environment. Available online July 2006. Forsyth, T. (1995) Business attitudes to sustainable tourism: Self-regulation in the UK outgoing tourism industry. Journal of Sustainable Tourism 3 (6), 210–230. Forsyth, T. (1997) Environmental responsibility and business regulation: The case of sustainable tourism. The Geographical Journal 163 (3), 270–280. Friedman, A.L., Miles, S. and Adams, C. (2000) Small and medium-sized enterprises and the environment: Evaluation of a specific initiative aimed at all small and mediumsized enterprises. Journal of Small Business and Enterprise Development 7 (4), 325–342. FTO (2006a) Operators Factfile: Pricing and Profit. West Sussex: Federation of Tour Operators. On WWW at http://www.fto.co.uk. Accessed November 2006. FTO (2006b) Supplier Sustainability Handbook. West Sussex: Federation of Tour Operators. On WWW at http://www.fto.co.uk. Accessed August 2006. GRI and TOI (2002) Tour Operators’ Sector Supplement for Use with the GRI 2002 Sustainability Reporting Guidelines. Paris: Global Reporting Initiative and Tour Operators Initiative. On WWW at http://www.toinitiative.org. Accessed December 2004. Hall, J. (2000) Environmental supply chain dynamics. Journal of Cleaner Production 8, 455–471. Handfield, R., Stroufe, R. and Walton, S. (2005) Integrating environmental management and supply chain strategies. Business Strategy and the Environment 14, 1–19. Herremans, I.M., Reid, R.E. and Wilson, L.K. (2005) Environmental management systems (EMS) of tour operators: Learning from each other. Journal of Sustainable Tourism 13 (4), 311–338.

16


Un co rre cte dP

roo fs

Herremans, I.M. and Welsh, C. (1999) Developing and implementing a company’s ecotourism mission statement. Journal of Sustainable Tourism 17 (1), 48–76. Ho, D.C., Au, K.F. and Newton, E. (2002) Empirical research on supply chain management: A critical review and recommendations. International Journal of Production Research 40 (17), 4415–4430. Holden, A. (1996) A profile of UK outbound ‘environmentally friendly’ tour operators. Tourism Management 17 (1), 60–64. Kalisch, A. (2002) Corporate Futures: Consultation on Good Practice. London: Tourism Concern. Kassinis, G.I. and Soteriou, A.C. (2003) Greening the service profit chain: The impact of environmental management practices. Production and Operations Management 12 (3), 386–403. Klemm, M. and Parkinson, L. (2001) UK tour operator strategies: Causes and consequences. International Journal of Tourism Research 3, 367–375. Krause, D. and Ellram, L. (1997) Critical elements of supplier development. European Journal of Purchasing and Supply Management 3 (1), 22–31. Lamming, R. and Hampson, J. (1996) The environment as a supply chain issue. British Journal of Management 7 (special issue), 45–62. Madsen, H. and Ulhøi, J.P. (2001) Greening of human resources: Environmental awareness and training interests within the workforce. Industrial Management and Data Systems 101 (2), 57–63. Maxwell, J., Rothenberg, S., Briscoe, F. and Marcus, A. (1997) Green schemes: Corporate environmental strategies and their implementation. California Management Review 39 (3), 118–134. McDonald, G. and Nijhof, A. (1999) Beyond code of ethics: An integrated framework for stimulating morally responsible behaviour in organisations. Leadership and Organization Development Journal 20 (3), 133–146. Miller, G. (2001) Corporate responsibility in the UK tourism industry. Tourism Management 22, 589–598. Miller, G. (2003) Consumerism in sustainable tourism: A survey of UK consumers. Journal of Sustainable Tourism 11 (1), 17–39. Miller, G. and Twining-Ward, L. (eds) (2005) Monitoring for a Sustainable Tourism Transition: The Challenge of Developing and Using Indicators. Oxfordshire: CABI Publishing. Mintel (2003) Eco and Ethical Tourism. London: Mintel International Group Limited. On WWW at http://www.mintel.com. Accessed December 2005. Mintel (2005) Sustainable Tourism in the Travel Industry. London: Mintel International Group Limited. On WWW at http://www.mintel.com. Accessed February 2006. Mintel (2006a) Tour Operator Market – Europe. London: Mintel International Group Limited. On WWW at http://www.mintel.com. Accessed December 2006. Mintel (2006b) Niche Market Tourism. London: Mintel International Group Limited. On WWW at http://www.mintel.com. Accessed December 2006. Mori (2000) Corporate Social Responsibility: Update. London: Mori. On WWW at http:// www.ipsos-mori.com. Accessed December 2005. Mowforth, M. and Munt, I. (2006) Tourism and Sustainability: Development and New Tourism in the Third World (2nd edn). Oxon: Routledge. Prahinski, C. and Benton, W.C. (2004) Supplier evaluations: Communication strategies to improve supplier performance. Journal of Operations Management 22, 39–62. Preuss, L. (2005) Rhetoric and reality of corporate greening: A view from the supply chain management function. Business Strategy and the Environment 14, 123–139. Quazi, H.A. (2001) Sustainable development: Integrated environmental issues into strategic planning. Industrial Management and Data Systems 101 (2), 64–70. Sasidharan, V., Sirakaya, E. and Kerstetter, D. (2002) Developing countries and tourism ecolabels. Tourism Management 23, 161–174. Schwartz, K. and Font, X. (2005) Working with Suppliers for Sustainable development: Tour operator Practices and Recommendations. Leeds Metropolitan University. On WWW at http://www.leedsmet.ac.uk/lsif/the/working with suppliers.pdf. Accessed August 2005.


17


Sethi, S.P. (2002) Standards for corporate conduct in the international arena: Challenges and opportunities for multinational corporations. Business and Society Review 107 (1), 20–40. Sirakaya, E. and McLellan, R.W. (1998) Modelling tour operators’ voluntary compliance with ecotourism principles: A behavioural approach. Journal of Travel Research 36, 42– 55. Tapper, R. (2001) Tourism and socio-economic development: UK tour operators’ business approaches in the context of the new international agenda. International Journal of Tourism Research 3, 351–366. Tearfund (2001) Tourism: Putting Ethics into Practice. Middlesex: Tearfund. Tepelus, C.M. (2005) Aiming for sustainability in the tour operating business. Journal of Cleaner Production 13, 99–107. TOI (2003) Sustainable Tourism: The Tour Operators’ Contribution. Paris: Tour Operators’ Initiative for Sustainable Tourism Development. TOI (2004) Supply Chain Engagement for Tour Operators. Paris: Tour Operators’ Initiative for Sustainable Development. On WWW at http://www.toinitiative.org. Accessed November 2004. TOI (2005) Integrating Sustainability into Business: An Implementation Guide for Responsible Tourism Coordinators. Paris: Tour Operators Initiative for Sustainable Tourism Development. On WWW at http://www.toinitiative.org. Accessed November 2005. Travelife (2006a) Sustainability in Tourism. On WWW at http://www.travelife.eu. Accessed January 2007. Travelife (2006b) Sustainability Store. On WWW at http://www.its4travel.com. Accessed January 2007. TTF (2005a) Captive Animal Self Check-List. London: The Travel Foundation. On WWW at http://www.thetravelfoundation.org.uk. Accessed September 2005. TTF (2005b) Suppliers Self-Check Journal: Good Practice in the Accommodation Sector. London: The Travel Foundation. On WWW at http://www.thetravelfoundation.org.uk. Accessed September 2005. Vachon, S. and Klassen, R. (2006) Extending green practices across the supply chain. International Journal of Operations and Production Management 26 (7), 795–821. Van der Duim, R. and Van Marwijk, R. (2006) The implementation of an environmental management system for Dutch tour operators: An actor-network perspective. Journal of Sustainable Tourism 14 (5), 449–472. Van Wijk, J. and Persoon, W. (2006) A long-haul destination: Sustainability reporting among tour operators. European Management Journal 24 (6), 381–395. Wearing, S. and McDonald, M. (2002) The development of community-based tourism: Re-thinking the relationship between tour operators and development agents as intermediaries in rural and isolated rural communities. Journal of Sustainable Tourism 10 (3), 191–206. Weeden, C. (2001) Ethical tourism: An opportunity for competitive advantage? Journal of Vacation Marketing 8 (2), 141–153. Weiler, B. and Ham, S.H. (2002) Tour guide training: A model for sustainable capacity building in developing countries. Journal of Sustainable Tourism 10 (1), 52–69. Welford, R., Ytterhus, B. and Eligh, J. (1999) Tourism and sustainable development: An analysis of policy and guidelines for managing provision and consumption. Sustainable Development 7, 165–177. Welsh, C.N. and Herremans, I.M. (1998) Treadsoftly: Adopting environmental management in the start-up phase. Journal of Organizational Change Management 11 (2), 145–156. Wilkinson, A., Hill, M. and Gollan, P. (2001) The sustainability debate. International Journal of Operations and Production Management 21 (12), 1492–1502. Williamson, D. and Lynch-Wood, G. (2001) A new paradigm for SME environmental practice. The TQM Magazine 13 (6), 424–432. Zsidisin, G. and Siferd, S. (2001) Environmental purchasing: A framework for theory development. European Journal of Purchasing and Supply Management 7, 61–73.