Major brands and retailers are under constant pressure to ensure their products and promotions are delivered not only on time, to budget, and with great return – but also to global ethical commitments with a considerable spotlight on integrity and standards.
Over the years we have seen numerous instances of significant ethical breaches within the supply chain of some major household names, including Nike which famously saw a supply chain decentralisation fail in the 1990’s with slave and child labour rife, and similarly even Apple supplier Foxconn in 2012.
Indeed, in recent years we have seen breaches observed in national and global press, including that of #Tshirtgate with the partnership between The Fawcett Society, Whistles and Elle magazine where T Shirt production was alleged to have taken place in ‘sweatshop conditions’, and even ethical charitable cause Trews found itself under media focus recently with claimed issues of their supply chain breaching conditions and working hours standards.
These ongoing, high profile instances amongst major brands and retailers begs the question – how has this been allowed to continue, and why are we still reading about ethical supply chain breaches?
Read our 7 tips below to help ensure your supply chain only hits the headlines for the right reasons:
1. Operate Strict Conformance Commitments
Beware even getting a price or entering detailed conversations with any potential supply partner, present your ethical expectations to ensure your requirements are factored into any setup, material or labour costs. It’s a lot easier than trying to backfill this solution from yours and your supplier’s perspectives. And don’t just allow internal agreement – demand formal acceptance and keep full supplier records that can be accessed at any time.
2. Use A Supplier Management Portal
Consider using a Supplier Management Portal such as Sedex (www.sedex.org.uk) or Ecovadis (www.ecovadis.com). Such tools help capture and manage global supplier information and helps you to identify potential risks or supplier weaknesses from a single, simple platform that can be fed by either suppliers, segments or your entire supply chain as you see most suitable.
Mark Robertson, Head of Marketing for Sedex, recognises the challenge of global complexity their organisation overcomes, and how this can lead to greater opportunities for partners in the future.
“‘Modern supply chains are increasingly complex, multi-tiered, global networks which encompass a growing list of sustainability issues. Few companies can tackle these challenges by working alone, and as a global not-for-profit membership organisation, Sedex provides a responsible supply chain platform, tools and services which enable companies to meet future challenges and opportunities.
Our unique approach enables buyers and suppliers to work collaboratively to manage risk and improve supply chain standards across sectors and regions.”
3. Seek Accreditations
Certain product categories have achievable accreditation levels associated with them – check these out and look for suppliers holding valid accreditation or certification. Not having them doesn’t automatically mean your supplier is an immediate risk, however with the time, effort and investment required to achieve such certifications should provide you with peace of mind in reducing risk.
4. Establish Local Presence
Getting in and around your suppliers’ facilities is undoubtedly one of the major features to a successfully ethical supply chain. Being able to view the conditions and talk to the employees responsible for producing your branded marketing materials, clothing, or any other product within your supply chain can be vital. Having local presence can also be a major plus giving you the capacity for regular and close visibility for the status of your production process, allowing for prompt intervention if necessary, reducing your financial and ethical risk.
We operate a Global Sourcing Centre, located in Shanghai with typically $500m annual spend, managed by Global Sourcing and QC Director Louis Moojiman who every day sees the benefit this facility delivers.
“With the large scale of our global import volume and having a professional and dedicated Asian sourcing and QA/QC team on the ground we are in the best position to support our global clients in finding professional and ethical trading sources for all our products.
The ability to talk in the local language and time frame, combined with the flexibility to visit the manufacturers at any time and frequency, means we’re able to bridge possible communication issues in an effective way. All these advantages significantly benefit our customers and make a difference in the market.”
5. Regularly Audit Your Suppliers
Supplier auditing helps maintain the ongoing integrity of your supply chain, and undoubtedly helps eliminate a great deal of risk that may come from complacency or assumptive management. With some of the examples of supply chain ethical breaches mentioned above, one of the frequent factors in causing this had arisen from the post agreement switch in production location e.g. advised at point of contract award the production would take place in one location, but upon agreement production actually took place in an alternative location – often a country with different ethical or labour practices and/or legislation.
mda uses a combination of internal testing and auditing services and independent specialists. This mix helps provide tactical and efficiency benefits of having full control of internal processes, in addition to the strategic and intelligence/ best practice benefits of appointing a dedicated audit provider to support us, and we’d definitely recommend going down this route.
6. Frequent Supplier Liaison
Whether you’re able to establish local presence close to your supply partners, or appoint a provider who does, regular supplier contact is essential, and can never be underestimated. Supply Chain Management is taking responsibility for all elements of your partner network and it’s co-ordination, and only by combining the due diligence and trust in your supply partners and close working relationships can we deliver the best results for our respective businesses.
With the rise in digital technology solutions, such as Skype, Google Hangouts and Communities, and even consumer smartphone solutions such as WhatsApp or FaceTime, the ability to visually connect with your supply chain is more accessible than ever before.
7. Utilise Independent Testing
Independent testing in isolation cannot be underestimated – it’s absolutely essential to delivering a robust, quality standards led supply chain built on best practice and industry insight. Our independent testing partner, SGS, offer us reliable, whole-of-market testing that provide us with additional peace of mind in all areas of production.
Robert Croskell, Principal Consultant for SGS, said of the value of testing, “In house laboratories and testing facilities are a great asset, but can be expensive to run when considering staffing, investment in equipment and maintenance. Outsourced independent facilities have the major benefit of no vested interest, whether product, buyer or seller, so you can be assured of standards that have only the end user and relevant legislation in mind.
Being able to tap into trained staff, specialist equipment, volumes of national and international legislation documents such as European Directives and Regulations and legal requirements including REACH, upholstery flammability and toy safety offers complete peace of mind for any product you are sourcing, without the relatively high fixed cost and investment to operate this in house”
8. Remember, You Get What You Pay For…
It goes without saying that if a supplier is able to achieve a price that is too good to be true, it almost always is. Equally, if intense negotiations are conducted post award that fall considerably below the market expectations based on your previously communicated ethical and quality commitments, some suppliers may look to make short cuts or efficiencies in areas that call the ethical standard of production into question. A survey published by Supply Management magazine in 2014 suggested that 5% of companies ‘do not care about ethics and sustainability’, whilst only 2% named choosing an ethical company as the primary factor in supplier decisions.
Whilst understandably price is and always will be one of the most key for the majority of procurement professionals, can your business afford to ignore ethics and run the risk of negative press, remedial costs and potential stock market devaluation? When next making a purchase decision, ask yourself the question ‘is this too low a price?’, or ‘would a slightly higher price eliminate any potential ethical breach?’. We as supply chain professionals must take the initiative to challenge the industry to ensure ethical supply chain management is the expectation and raise global standards for both our businesses, our customers and the individuals and communities affected by implementing poor ethical practices around the world.
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