Ethics in the Supply Chain

TCii Strategic and Management Consultants
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Once the preserve of left-leaning collectives and small traders, ethical trading is becoming more mainstream as businesses consider the benefits of ensuring the positive ethical profile of each link in their supply chain. Some companies regard ethical trading as a way of distinguishing themselves from the competition and tapping into new markets, while others recognise distinct financial rewards from factors as simple as raising employee morale.

Reasons for Ethical Supply Chain Management – Brand Image

Computing giant Apple has recently hit the headlines owing to concerns regarding the treatment of staff working in the factories belonging to their suppliers based in the Far East. Rumours of poor pay, long hours, unhealthy working conditions and a series of worker suicides have prompted Apple CEO Tim Cook to announce a number of inspections to be carried out by an independent body in an effort to bury claims of unethical trading practices.

This media attention, whether deserved or not, has led to a barrage of criticism and negative press that threatens to damage Apple’s brand image permanently. The rise of movements such as ‘Occupy Wall Street’ has increased public consciousness around business abuses of employees and general unethical practices, meaning that any company unable to demonstrate a genuine commitment to improving conditions risks facing a similar image problem to that of Apple.

Reasons for Ethical Supply Chain Management – Legislation

Most developed countries have laws governing ethical business practices, but unscrupulous companies can still profit from the lax practices of developing nations. A recent law passed in California seeks to change this, however, by insisting that any company doing business in the US state demonstrate that its supply chain does not use slave labour or illegal immigrant workers at any point.

Known as the Transparency in Supply Chains Act, this new law insists that companies share responsibility for the practices of their suppliers, thereby raising standards and making the entire factory-to-store process more ethical. Other US states are monitoring the success of the new Act before implementing their own versions.

Reasons for Ethical Supply Chain Management – Environmental Concerns

Closer to home, mobile phone network O2 has begun a three-year root and branch review of its supply chain to increase efficiency and to reduce carbon emissions. The ‘Think Big Blueprint’ is intended to transform O2 by making sustainability a key factor in future business decisions, a commitment that O2 expects their suppliers to abide by also.

Key to the Responsible Supply Chain Policy is greater collaboration between suppliers to improve working conditions, reduce carbon emissions and generally raise the profile of O2 as a sustainable business, tapping into the wider benefits such an image brings. Suppliers who refuse to adhere to the new policy risk losing their supply contracts altogether.

Clearly there are other reasons for implementing an ethical supply chain, many of which produce discernible benefits to a company’s balance book. In an age where workers’ rights and ‘fairness’ appear near the top of the general public’s agenda, businesses would do well to investigate and implement ethics into their supply chain as an urgent matter of course.



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