The Impact of Digitalization Practices on Supply Chain Sustainability and
Organizational Sustainability
MOHAMMED TAJ HEJAZI
Supply Chain Management Department,
University of Business and Technology,
University of Business and Technology, 21448, Jeddah,
SAUDI ARABIA
Abstract: - The objective of this research is to examine the influence of digital transformation on the sustainability
of both the organization and its supply chain. A sample of 100 workers from the company was chosen randomly to
complete an online survey (questionnaire) to obtain numerical data. The findings reveal that digitalization practices
have a statistically significant positive correlation with supply chain longevity, indicating that digitization within
firms enhances supply chain efficiency and positively affects long-term business viability. The study also
highlights that the widespread adoption of digital methods increases the likelihood of an organization's survival.
This research underscores the importance of digitalization and its potential benefits for enhancing both supply
chain and organizational sustainability. As a result, businesses that embrace digitalization methods, including social
media, can improve their long-term prospects for success.
Key-Words: - Digitalization, Social Media, Supply chain sustainability, Organizational sustainability, Performance
Received: February 19, 2023. Revised: August 8, 2023. Accepted: September 6, 2023. Available online: October 24, 2023.
1 Introduction
The purpose of this research is to investigate the
effects of digital transformation (DT) on supply
chains (SCs) in the digital era. Technical acceleration
has been a top concern for corporations, although it
requires more than simply technology. The process
of digital transformation involves a range of factors,
such as enhancing the capabilities of employees,
modifying organizational structures and management
approaches, empowering leaders, taking cultural
aspects and values into account, addressing issues
related to business strategies and processes,
considering customer journeys and experiences, and
utilizing technology as a means to drive and facilitate
the organization's business models. However, the
deployment of technology alone does not constitute a
transformational process unless it leads to changes in
the organization's entire strategy, system, culture, and
mindset and ultimately drives the evolution of the
overall business model, [1]. To remain competitive,
organizations must adapt and improve their processes
when new technologies arise. DT has had a good
effect on businesses and even helps enhance their
performance. However, there is still much to be
learned about the concepts of digitization,
digitalization, and digital transformation, [2]. DT can
turn traditional supply chains into digital and smart
supply chains by linking all operations and processes,
including product creation, procurement, production,
logistics, suppliers, consumers, and services. The
conceptual research model is presented in Figure 1.
2 Literature Review
The digital transformation (DT) framework spans a
vast array of themes, such as enterprises, business
models, partnerships, process workflows, and the
adoption of new technology. It also necessitates the
participation of diverse stakeholders, including
customers, suppliers, governments, retailers, and
financial institutions. It is by separating the usage of
organizational assets into static and dynamic
capabilities businesses can establish a rare and
difficult-to-replicate competitive edge. Dynamic
capabilities relate to the application of technology in
the production of a computer-aided design (CAD)
that can be maintained over the long term by
carefully managing external interactions. This
strategy can greatly assist businesses in establishing a
lasting competitive edge, [3].
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Fig. 1: The conceptual research model
2.1 Digitalization in Supply Chain
The term "digitization" refers to the use of new
technologies to streamline the supply chain (SC)
connections between producers and consumers.
Many previous studies have addressed the effects of
digitalization in SC (DSC). To coordinate SC
stakeholder action and improve corporate
collaboration, the DSC utilizes hardware, software,
and worldwide communication networks. In contrast,
however, the concept of "digitalization" is still in its
infancy as a theoretical framework. Digitalization
rests on the development of information and
communication technology, [4].
When a company undergoes digitalization, it
undergoes a process, of organizational, and cultural
transformation in response to market demands. With
this perspective, traditional SC can be remodeled
completely into a system in which activities at the
societal, organizational, and human levels are all
seamlessly interrelated.
DSC could increase the SC's utility, make it more
widely available, and lower its price. DSC enables
digital platforms for the sharing, collaboration, and
communication of data, improving reliability, agility,
and efficiency. Companies are beginning to think
about digitalization because of the numerous
advantages it offers when applied to SC. There has
been a radical shift in how businesses and people
interact with one another and their environments as a
result of the advent of digital technology. The
interconnection inside SC necessitates cooperation
across many technologies, such as sensors, cloud
processing, cyber-physical practices, and high-
performance computing, to drive management
change toward Industry 4.0. The incorporation of
DSC allows for improved economic performance and
has long-term positive effects on sustainability,
adapting to changing circumstances through the use
of digital tools and up-to-the-minute data on
processing times and due dates. However, there are
obstacles in constructing DSCs because of the
precision of the information, and the necessary data
must be gathered from a wide range of sources. To
achieve sustainable development, businesses need to
build on their existing SC by including the use of
digital technologies. This means that for businesses
to achieve their expansion goals, they need to
reconceive their SC process as a DSC network, [5].
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Many businesses have, up until recently, viewed
technology largely as a tool for improving
communication and sharing information to increase
productivity. The COVID-19 pandemic, however,
has made digital transformation a top priority for
many businesses. Businesses have learned the hard
way from the COVID pandemic's repercussions and
consequences that technology should be viewed as a
tool for preventive management. DT relies heavily on
information technology and analytic services, and
modern tools make it possible to respond to
situations quickly and creatively. There is increasing
evidence to support the notion that digital
transformation (DT) can have a positive impact on
operational and financial performance, customer-
centricity, multi-supplier partnering relationships,
and CAD within supply chains. New DTs can be
incorporated into procurement procedures to better
assist SCs, and this can show how procurement can
develop into an essential role in SCs that use DT, [6].
A more open and auditable procurement system is
impossible without digital change. More
transparency and traceability between buyers and
sellers can help businesses succeed by boosting trust
and cooperation between the two parties, which in
turn will help procurement departments become more
strategic and contribute to the achievement of the
organization's overarching objectives. When applied
correctly, DT in procurement can produce CADs that
are both long-lasting and difficult to replicate.
Improved data obtained through digital procurement's
expanded access to innovative suppliers,
collaborative platforms, innovation laboratories,
advanced analytics, enhanced processing power, and
visualization tools can greatly enhance improved
strategic decision-making. This underscores the
importance of utilizing digital procurement to obtain
better data for strategic decision-making purposes.
Due diligence (DT) is essential in humanitarian SCs
because it speeds up the distribution of tracked
logistics aids and support to those who need them
most, [7].
2.2 Sustainable Supply Chain Capabilities
(SSCC)
The concept of sustainable development can be
described as pursuing growth that satisfies present
needs while preserving future generations' ability to
meet their own needs. Corporate sustainability
pertains to an organization's capacity to meet the
needs of both direct and indirect stakeholders (such
as shareholders, employees, customers, pressure
groups, communities, etc.) without compromising
this ability in the future. The underlying principle of
this concept is that businesses, their supply chains,
the environment, and society are all interconnected
and interdependent, such that companies cannot
prioritize short-term profits for shareholders at the
expense of the planet's long-term health, [8].
To meet the challenge posed by various
stakeholders, businesses must incorporate
sustainability into their strategy-forming process in
supply chain/network management, moving beyond
just economics, [9].
Hart's (1995) original research, which extended
the RBV and suggested that a firm's competitive
advantage was based on internal resources, is an
example of how SSCM capabilities have their origins
in environmental management. A new viewpoint, the
NRBV of the firm, was offered as an advancement of
the RBV. A firm’s ability to implement SSCM
practices like stakeholder integration, continuous
improvement, and shared vision, he claimed, grows
out of its commitment to creating novel and
integrated environmental solutions.
Pollution prevention is the initial tactic, and it
necessitates the ability to constantly innovate. The
second tactic, known as product stewardship, calls
for the cultivation of a skill known as stakeholder
integration. The third strategy involves collaborating
with diverse stakeholders and committing to a shared
objective of reducing the company's environmental
footprint through the adoption of low-impact
technologies and products over the long haul. The
sustainability dimensions should reflect:
• Economic: a low-cost system that functions well,
provides cooperative solutions and provides a variety
of transport mode options while supporting the local
economy.
• Environmentally friendly, as they produce less
pollution, waste, and greenhouse gases; use less
nonrenewable energy; and repurpose and recycle
their materials.
• Social: ensuring fundamental access requirements
of individuals/communities are satisfied in a secure
manner that promotes healthy lifestyles and promotes
intergenerational equity, [10].
2.3 Social Media
The term "social media" is used to describe any
online medium that actively seeks to foster
communication and involvement among its audience
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members in real time. The first defining feature of
social media is that it encourages active participation
from its users. While some social media platforms,
like Facebook, encourage user participation in the
form of comments and likes, the vast majority of
social media sites restrict users to merely viewing the
content posted by others. Moreover, in order to
encourage participation and communication, it is
essential to set up a profile page. Second,
communicating with others online, whether they be
friends, family, or strangers who share interests,
requires interaction, [11].
Promoting a business or cause via social
networking sites is called daily social media (SM),
and it is becoming increasingly popular. Social
media's end goal is to supply the type of content that
users will want to share with their friends and
followers, which is what consumers hope to see from
businesses when they visit social networking sites.
This is why the rise in popularity of Google,
Facebook, Twitter, and YouTube highlights the need
for a social networking strategy, a tactic increasingly
employed in social media marketing. Shared content
posted online helps bring in new customers and
boosts a company's ranking in search results. These
online platforms can be undeniably used as a reliable
means of communication for interacting with clients,
building relationships, and resolving issues in a
timely manner. By outlining the types of content you
will produce and posting on each platform, you can
formulate a social media strategy, [12].
The usage of social media is especially highly
prevalent among small and medium-sized businesses
(SMEs) for product and service promotion in
addition to communication. Immediacy provided by
social media allows businesses to keep a direct and
healthy relationship with their online customers.
Customers can talk to one another and share
feedback about the goods and services they have
purchased. The vast majority of businesses that have
embraced social media do so to listen in on the
industry, product, and competitor-related
conversations, [13].
2.4 Organizational Sustainability
Performance
Sustainability performance indicators and their
connection to environmental management practices.
Stakeholders' growing environmental consciousness
may encourage businesses to prioritize enhancements
to their environmental performance management
systems (EMPs). Greenhouse gas emission reduction,
carbon trading, investments in pollution-free
technology, measurable environmental goals, and
waste management are all examples of what we mean
when we say that an organization's EMPs include
these things. The available literature suggests that an
organization's EP may lead to improved CVP, EVP,
cost-effective operation, and a better social
responsibility image. Customers who care about the
environment are more likely to be satisfied with a
business if they know that the company operates (and
produces its products and services) sustainably. This
reputation will help the company keep its current
clientele and attract new ones, giving it a useful edge
in the marketplace, [14].
2.4.1 Environmental Performance
Attaining environmental efficiency requires a
meticulous interpretation of environmental
undertakings and effective evaluation and execution
of environmental responsibilities. In particular,
organizations should act with responsibility towards
safeguarding living organisms, ensuring the efficient
use of resources, adopting appropriate waste disposal
practices, employing sustainable energy
consumption, minimizing risks and losses, acquiring
adequate insurance coverage, marketing products
safely, and practicing effective environmental
management. Monitoring environmental performance
indicators can assist in guaranteeing those basic
human requirements are satisfied, living standards
are enhanced, and resource consumption is decreased
and optimized, enhancing the organization's
sustainability. Environmental performance indicators
can help achieve this by measuring the organization's
influence on natural systems, identifying important
impacts, connecting environmental objectives with
organizational and employee development, and
creating fair pricing. Sustainable supply chain
management strategies, such as clean production,
green management, and supply chain management,
can improve an organization's efficiency and reduce
resource waste, overconsumption, and related
expenses, offering a competitive edge, [15].
In sustainable internal supply chain management,
environmental design plays a pivotal role by
prioritizing waste reduction and material
optimization to improve an organization's
environmental performance and lower costs. It
ensures this by prioritizing the implementation of
eco-friendly manufacturing practices, and sustainable
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internal supply chain management aims to achieve
these objectives.
Examples of environmental performance indicators
are:
- Improvements in the company's operations to
lower their environmental impact fall under
the purview of operational management. It
lessens the environmental toll of
manufacturing by controlling variables like
waste generation, pollution, emissions, and
power consumption.
- Features of a product are its unique qualities
and characteristics. The indicator takes into
account several different factors, such as the
percentage of recycled materials used and the
presence of environmental labels.
- Effective recycling includes factors like
reprocessing time, energy use, and waste
produced.
- The phrase "environmental technology" is
used to describe the process of creating
innovative technological solutions to reduce
negative effects on the natural environment
and the general ecosystem, [16].
2.4.2 Economic Performance
When a business has good economic performance, it
is able to meet the monetary goals of its satisfied
shareholders and stakeholders through profitable
investment returns. Financial and promotional gains
attributable to more environmentally responsible
supply chain management constitute economic
performance. Reduced expenditures on raw
materials, energy, waste treatment and disposal, and
clean-up after environmental mishaps all contribute
to financial gain. The average marketing share,
average marketing profit, and average marketing
profit growth all increase as a result of the enhanced
marketing performance. The economic dimension
can be seen as a tool for gauging an organization's
long-term viability by contrasting it to competitors in
the same market and assessing its immediate and
future capabilities. As a regulatory concept,
sustainable supply chain practices are connected to
the business's capacity to grow revenues and market
share by putting in place a risk-reduction plan that
also improves productivity, [17]. From a purely
economic vantage point, indicators of economic
performance include:
- Cost to the environment - the sum of all expenses
incurred by the company as a result of greening
its conventional supply chain. Include things like
the price of recycling, the price of electricity, and
the price of environmentally friendly building
supplies and waste removal.
- Costs incurred by the supply chain in the normal
course of business; cover everything from the
initial purchase of raw materials to the final sale
of a product to the consumer. Eco-friendly
supply chain procedures have an impact on the
standard supply chain's bottom line. Delivery and
stocking expenses, for instance, are predicted to
decrease as a result of eco-friendly SCM
procedures.
- Quality: This relates to the product itself and has
a huge bearing on supply chain efficiency. The
number of customer complaints, the length of
time a product is guaranteed to last, the amount
of waste diverted from landfills, and the
consistency with which packages are delivered
are all included in this metric.
- The term "flexibility" refers to the supply chain's
adaptability to a variety of circumstances that
may arise as a result of variations in the typical
processes along the chain.
- The response is a measure of the supply chain's
ability to respond promptly to demands for
specific goods or services. It encompasses
various factors, such as manufacturing and
purchasing lead times, on-time delivery, product
return time, and the overall supply chain cycle
time, [18].
3 Research Methodology
For studies involving sizable populations,
questionnaires are among the most reliable data
collection tools. The fundamental purpose of this
research is to examine how digitalization policies and
procedures affect long-term organizational and
supply chain viability. Quantitative information was
gathered using a questionnaire distributed online. The
study's sample, consisting of 100 employees, was
drawn at random.
3.1 Result
- Demographic:
To see how the study's sample breaks down by sex,
see Table 1. From the data in the table, we can see
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that males make up 96% of the sample, while
females account for only 4%. The largest proportion
of the study population (60%) is comprised of those
aged 36–45; the next largest (22%) are those aged
25–35; and the smallest (18%) are those aged 45 and
up. According to the data, the category "More than
10 years" had the largest proportion in the Work
Experience section of the study sample, at 80%,
followed by the category "6 to 10 years," at 20%.
Table 1. The distribution of the study sample by gender
Gender
Frequency
Valid Percent
Cumulative Percent
Valid
Male
96
96.0
96.0
Female
4
4.0
100.0
Total
100
100.0
Age
Frequency
Valid Percent
Cumulative Percent
Valid
25-35 years old
22
22.0
22.0
36-45 years old
60
60.0
82.0
More than 45 years old
18
18.0
100.0
Total
100
100.0
Work Experience
Frequency
Valid Percent
Cumulative Percent
Valid
6 to 10 years
20
20.0
20.0
More than 10 years
80
80.0
100.0
Total
100
100.0
Table 2. The relationship between the impact of digitalization practices and supply chain sustainability capabilities
ANOVAa
Model
Sum of Squares
Df
Mean Square
F
Sig.
1
Regression
2.872
1
2.872
15.606
.000b
Residual
18.038
98
.184
Total
20.910
99
a. Dependent Variable: The impact of digitalization practices
b. Predictors: (Constant), supply chain sustainability capabilities
3.2 Hypotheses
There is a statistically significant relationship
between the impact of digitalization practices and
supply chain sustainability. Table 2 indicates a
significant correlation between the adoption of
digitalization practices and the sustainability of the
supply chain capabilities, with a significance ratio of
less than 0.05. This finding highlights the substantial
contribution of digital transformation in enhancing
the effectiveness of supply chain sustainability
capabilities within the organization.
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Table 3. The relationship between organizational sustainability performance and the impact of
digitalization practices
ANOVAa
Model
Sum of
Squares
Df
Mean
Square
F
Sig.
1
Regression
.091
1
.091
.225
.000
Residual
39.749
98
.406
Total
39.840
99
a. Dependent Variable: organizational sustainability
b. Predictors: (Constant), The impact of digitalization practices
There is a statistically significant relationship
between the impact of digitalization practices and
organizational sustainability. According to the
information in the table, there is a statistically
significant correlation between how employees
evaluate organizational sustainability and how
digitalization initiatives have affected that
sustainability. Given that the significance ratio was
less than 0.05, a significant association was
discovered to exist. The results also show a
correlation between improved organizational
sustainability and greater adoption of digitalization
techniques. The ANOVA chart shows that there is a
positive relationship between digitization methods
and supply chain longevity. This highlights the
significance of digitization in encouraging
environmentally responsible supply chain
management. The regression model reveals that the
predictor variable (supply chain sustainability) has a
coefficient of 2.872 and a significant F-statistic of
15.606 at a significance level of less than 0.05,
indicating a robust positive correlation between the
adoption of digitalization practices and supply chain
sustainability. These findings underscore the notion
that companies that prioritize digital transformation
initiatives are more likely to enhance the
sustainability of their supply chain. Similarly, the
study discovered a sizeable link between the impact
of digitization methods and the longevity of
businesses. The coefficient for the predictor variable
(organizational sustainability) is less than 0.05 and
statistically significant, with an F-statistic of 19.486
displayed in the ANOVA table. These findings point
to a correlation between digitalization practices and
organizational sustainability, with greater adoption of
digitalization methods being associated with higher
levels of organizational sustainability.
Overall, the statistical analysis provides evidence to
support the argument that digitalization practices can
contribute significantly to enhancing the
effectiveness of supply chain sustainability and
organizational sustainability. Organizations that
invest in digital transformation initiatives are more
likely to improve their sustainability performance,
resulting in long-term benefits such as reduced costs,
improved efficiency, and increased competitiveness.
The study's findings provide valuable insights for
organizations seeking to improve their sustainability
performance and enhance their digitalization
practices. The relationship between organizational
sustainability and the impact of digitization practices
is presented in Table 3.
4 Discussion
Environmentally friendly policies and processes must
be implemented for businesses to retain solid
connections with stakeholders and customers.
Stakeholders may feel driven to create their own
rules and processes if there is no clear emphasis on
environmental sustainability.
The findings of the study show a substantial and
favorable relationship between digitization methods
and supply chain sustainability. These findings lend
support to the theoretical paradigm that posits a
positive relationship between digitalization efforts
and organizational sustainability. Furthermore, the
study uncovers significant connections between
digitalization strategies and organizational
sustainability.
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Digitalization strategies can dramatically
improve the efficiency and sustainability of supply
chain operations, allowing businesses to integrate
their environmental goals with their overall business
objectives. As a result, as a basic part of
organizational sustainability, integrating
digitalization methods into sustainable supply chain
management should be prioritized. Businesses should
constantly look for new methods to use technology to
fulfill their sustainability goals. This will allow them
to improve their brand and strengthen connections
with stakeholders and customers, all while
encouraging environmental sustainability.
5 Conclusion
The primary purpose of the present study was to
explore the influence of sustainable supply chain
management methods on the performance of
enterprises. However, in future research initiatives, it
would be helpful to widen the field of inquiry and
study the possible impact of other sustainable supply
chain management methods on organizational
performance. Although there is an increasing interest
in both sustainable supply chain management and
digitalization, there is currently a scarcity of research
that studies the interrelationship between these two
concepts or explores connected supply chain
practices. Therefore, expanding the measurement of
the impact of sustainable supply chain practices on
organizational performance is essential, and utilizing
the indicators presented by sustainable performance
dimensions would provide a reliable approach to
accomplish this. Further research in this area would
provide important insights into the effective
implementation and optimization of sustainable
supply chain techniques to improve organizational
performance. As a result, firms will be able to better
match their sustainability objectives with their
business goals, leading to a better understanding of
how these practices may be used to improve overall
performance.
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Policy)
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stages from the formulation of the problem to the
final findings and solution.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflicts of Interest
The author has no conflicts of interest to declare.
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US
WSEAS TRANSACTIONS on BUSINESS and ECONOMICS
DOI: 10.37394/23207.2024.21.4
Mohammed Taj Hejazi
E-ISSN: 2224-2899
43
Volume 21, 2024