Fierce competition and the globalisation of supply chains is fuelling an obsession with driving down supply costs, meaning unethical low-cost vendors are contributing to modern production processes. To protect your firm’s reputation and help end the exploitation of workers, here are four steps towards maintaining an ethical supply chain.
A comprehensive review and reconstruction of your supply chain should begin with due diligence, and the possible implementation of HACCP (Hazard Analysis Critical Control Point) approaches along its entire length. Such checks are typically performed to identify and protect against hazards associated with production and distribution, but they can be used more broadly.
Due diligence is of particular importance if suppliers are based in locations with less of a focus on compliance, or if you operate in a sector that is particularly vulnerable to exploitation. Look beyond existing regulations and explore to what extent they are being followed before deciding whether the standards met by suppliers match your own.
Complete an audit of all supply contracts to identify which agreements are of concern and what steps are required to safeguard against unethical approaches. It may be necessary to insert specific clauses and conditions into contracts that must be followed in order to continue the relationship. Look into how suppliers obey reporting and regulatory obligations and what role you can play in this to encourage complete compliance. Micro-management may be required to guarantee suppliers are acting responsibly, but it’s a worthwhile part of supply chain risk management.
A strong supply chain relies on the unity of all links, and by being willing to change as the market does you can alleviate the pressures on vendors that lead to immoral practices. Consider purchasing arrangements in light of current political, environmental and economic conditions which may affect production output and the costs involved. These changes will follow findings from an audit, and although it may seem to be a complex process, the long-term benefits are worth the initial inconvenience and outlay.
Presently, businesses have no duty to take action against a supplier who may be acting unfairly to a third party, but this may change in the future if new reporting requirements and procurement regulations are introduced. Beyond what the contract with your supplier states, all other practices can be tied to corporate social responsibility – or a lack of – and going above the minimum requirements has its advantages.
To truly establish an ethical, transparent, and responsible supply chain, it is worth scrutinising every link and negotiating with a new supplier if existing producers don’t fit in with your company’s values. A renewed focus on ethics and the anticipation of new legislation allows time to make changes on your own terms before a deadline is introduced, while also presenting your firm as a forward-thinking innovator.
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