A supply chain design approach considering environmentally sensitive customers: the case of a German manufacturing SME

Sustainable business development is one of the main topics of research and management in recent years. Since the environmental pillar is a part of the sustainability concept, companies are forced to (re-)design their supply chain according to environmental issues. Both government and other stakeholders, e.g. non-governmental organisations and customers, pay a lot of attention on a company’s environmental performance. Hence there is a risk of losing reputation if a company does not comply with environmental norms. We focus on the impact of customers’ requirements regarding the environmental performance of a product on strategic supply chain design decisions of the manufacturer of the product. Thus, we consider the case of a German manufacturing company and present a mixed-integer linear programming supply chain design model with a demand function that is influenced by sustainability requirements. The company is assumed to be able to improve the environmental performance of the products sold and affect the customer demand positively by designing an environmentally conscious supply chain.