Learn what ethical supply chains are and how businesses can stay on top of their suppliers to abide by sustainable production techniques. Find out how companies adopt corporate responsibility measures that tie compensation to ethical supply chain management at multiple levels of the corporate ladder.
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An ethical supply chain incorporates employees' rights and environmental concerns, with sustainability a top priority across the supply chain. The reduction of dangerous emission, waste of raw materials, and human rights issues are just some of the elements that come into play with an ethically sourced and managed supply chain.
Research from APICS and Loyola University Chicago indicates that companies have gotten the memo, thanks in large part to growing public concern over abuses of the past. The research team reported that 83% of supply chain professionals found supply chain ethics very important to their business.
In 2019, the Association for Supply Chain Management released standards to assist customers with economic, ecological, and ethical concerns regarding supply chain management. ASCM rewards suppliers who meet the standards with an ASCM Enterprise Certification. This credential shows that the supply has worked to achieve excellent ethics and transparency in supply chain material sourcing, waste management, and employee treatment.
Supply chain ethics have emerged as a critical element in managing businesses. This previously obscure function has seen the light of day and is now openly discussed in boardrooms and by the C-suite.
Leaders today see supply chain management ethics as a strategic must-do that gives them a competitive edge over businesses called out for human rights or environmental wrongdoing. Most people have come to understand the necessity of the ethical supply chain. However, there has been a lot of confusion over who's responsible for making sure policies play out when dealing with suppliers.
Respondents of an ASME (Association of Small & Medium Enterprises) survey found various departments were responsible for upholding the policy with the top contenders including:
This thinking creates a dangerous gap in the belief that ethics are important and the actual carrying out of those beliefs at multiple levels of the organization. Only 31% of participants acknowledged responsibility partially fell on their own shoulders.
Inconsistent communication and a lack of accountability create gaps where abuses go unnoticed and therefore silently sanctioned. One solution involves the commitment of top executives to fix the breakdown in communication. The message from legal, finance, and corporate leadership should be unequivocal as far as the tie between corporate goals and sustainable, ethical practices in how goods are produced and delivered to the company's customers.
If your organization lacks a road for these goals, you can start with a summit of leaders and representatives from the supply chain. Map out measurable goals and determine who has ultimate responsibility in putting together a way to ensure every department holds up its end of the bargain.
Sourcing of materials and parts has become global and this increases the risk of exploitation when it comes to the fair treatment of workers and ethical concerns that involve pollution and waste.
Supply chain ethics include the following:
These practices have become part of international law, but there is still work to be done as far as enforcement in many parts of the world.
Corporate Social Responsibility has gained traction due to both internal pressures from employees and leaders and from external pressure, including growing expectations from consumers.
Activists, media outlets, and even governments are now holding companies responsible for the ethical considerations of their decisions, including the entire supply chain. For companies that want to attract and keep to people, it's important that the corporate values mirror those of the workers. Fair wages, anti-discriminatory hiring practices, a ban on human trafficking, and certification as a "green" company all work towards corporate social responsibility.
At the end of the day, companies must know what their suppliers are doing. Transparency across the supply chain is becoming the standard rather than the exception. In some places, it's being codified into law.
Customers want to know that the company has strong corporate value and that the products they purchase don't harm the environment or compromise the safety of those who produce them.
Businesses are solidifying their expectations in written agreements with suppliers, who must use more sustainable materials and manage waste in a way that doesn't destroy the environment.
As awareness continues to grow and more laws are passed, both ethical supply chain and corporate responsibility concepts will continue to become more mainstream, to the benefit of workers, consumers, and the environment.
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