During the past decades sustainability has become a widespread phenomenon within several industries due to an increased focus on the subject. The concerns related to climate change and sustainability influence consumers, where more consumers now demand sustainable solutions. This development has a further effect and causes companies to demand sustainable solutions from their own suppliers. The changing external environment companies are facing in terms of sustainability becoming more relevant emphasize the importance of incorporating sustainability in the supply chains of the companies. The purpose of this master thesis is therefore to investigate the operationalization of how to incorporate sustainability within a company’s supplier selection. This thesis' investigation is based on the Danish company DOLLE A/S, and examines how they can incorporate sustainability, hereunder environmental criteria, in their supplier selection and furthermore the challenges and opportunities, that arise from it. The research question is derived from a literature review concerning total cost of ownership theory and sustainable supplier selection, which also forms the theoretical basis for this thesis’ analysis. The aim is to develop a sustainable framework for supplier selection, which incorporates environmental criteria within DOLLE’s present supplier selection.
The result of the study shows how DOLLE currently does not include environmental criteria when selecting suppliers. The company's focus is mainly on costs, which is illustrated in a dollar-based TCO-calculation in part 1 of the analysis. Part 2 investigates which environmental criteria DOLLE should incorporate in their new sustainable framework for supplier selection. The selected criteria are being investigated in a value-based TCO-calculation, where five environmental criteria are being analyzed in the context of DOLLE. Based on part 1 and 2 of the analyses, part 3 concludes which economic and environmental criteria DOLLE should incorporate in the company’s framework for their future supplier selection. The economic criteria are ‘price’, ‘product characteristics and quality’, ‘packaging’ and ‘transportation’, where the environmental criteria are ‘environmental management system’, ‘environmental related certificates’, ‘green packaging and labeling’ and lastly ‘recycling’. These criteria form the basis of DOLLE’s future framework for sustainable supplier selection, where sustainability is being obtained through a combination of economic and environmental criteria. By incorporating sustainability as a mix of economic and environmental criteria, DOLLE can apply the framework as a management tool, which ensure that they can select and evaluate their suppliers based on a sustainable framework, where the costs also are being considered.