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| How to ... build a socially-responsible global supply chain | How to ... build a socially-responsible global supply chain |
| (about 2 months later) | |
| As awareness of corporate social responsibility grows, businesses have come to realise that their supply chain and its management can say a lot about the kind of company they are and the values they hold. | As awareness of corporate social responsibility grows, businesses have come to realise that their supply chain and its management can say a lot about the kind of company they are and the values they hold. |
| After the tragic collapse a Bangladeshi factory building, the Rana Plaza, which caused the death of about 1,200 low-paid workers, retailers including Primark, H&M, Marks & Spencer and Inditex (which owns Zara) were left reeling from the PR backlash. Consumers in the west recoiled at the thought of well-known high street brands trading with suppliers that had allegedly shown such scant regard for the health and safety of their employees. | After the tragic collapse a Bangladeshi factory building, the Rana Plaza, which caused the death of about 1,200 low-paid workers, retailers including Primark, H&M, Marks & Spencer and Inditex (which owns Zara) were left reeling from the PR backlash. Consumers in the west recoiled at the thought of well-known high street brands trading with suppliers that had allegedly shown such scant regard for the health and safety of their employees. |
| The retailers affected responded by forging an accord and raising money to help pay for fire safety and building improvements at the factories they use in Bangladesh. They have also recently agreed to carry out an inspection of all the Bangladeshi garment factories that supply them within the next nine months. | The retailers affected responded by forging an accord and raising money to help pay for fire safety and building improvements at the factories they use in Bangladesh. They have also recently agreed to carry out an inspection of all the Bangladeshi garment factories that supply them within the next nine months. |
| But should these businesses have known better? | But should these businesses have known better? |
| Back in 1997, apparel manufacturer Nike, came under criticism when it was revealed that workers at a supplier's factory in Vietnam were being exposed to toxic fumes well above permissible limits. Nike's chairman responded by making a series of promises to change business practices across its global supply chain. But the sports brand came under fire again three years later when further examples of worker exploitation came to light. To date, many consumers believe that Nike's corporate image has been tainted by these events. | Back in 1997, apparel manufacturer Nike, came under criticism when it was revealed that workers at a supplier's factory in Vietnam were being exposed to toxic fumes well above permissible limits. Nike's chairman responded by making a series of promises to change business practices across its global supply chain. But the sports brand came under fire again three years later when further examples of worker exploitation came to light. To date, many consumers believe that Nike's corporate image has been tainted by these events. |
| To prevent ethical issues arising within a company's global supply chain and potentially causing lasting damage to their brand, some basic principles should be followed. | To prevent ethical issues arising within a company's global supply chain and potentially causing lasting damage to their brand, some basic principles should be followed. |
| Keep it simple: Cost pressures mean there is often a tendency for supply chains to become more complex as companies try to trim overheads by switching suppliers. But this extra complexity, which sometimes results in the use of tiers of sub-contractors and impacts on supply chain visibility, inevitably exposes the buyer to increased risk. | Keep it simple: Cost pressures mean there is often a tendency for supply chains to become more complex as companies try to trim overheads by switching suppliers. But this extra complexity, which sometimes results in the use of tiers of sub-contractors and impacts on supply chain visibility, inevitably exposes the buyer to increased risk. |
| Make ethical considerations part of every buying decision: Most businesses have corporate and social responsibility objectives as part of their overall corporate strategy but are these being applied across the supply chain? Do such criteria get overlooked when commercial considerations come to the fore? Ethical criteria should be a part of every buying decision. | Make ethical considerations part of every buying decision: Most businesses have corporate and social responsibility objectives as part of their overall corporate strategy but are these being applied across the supply chain? Do such criteria get overlooked when commercial considerations come to the fore? Ethical criteria should be a part of every buying decision. |
| Collaborate, but stick to your principles: When setting up a relationship with a new supplier it is important to be clear about what you expect from them at the outset. Businesses should emphasise any ethical expectations, alongside any commercial ones. If sub-contracting is against the rules, make this clear and part of any contractual agreements. Tell the supplier what will happen if they are found to have breached the rules. | Collaborate, but stick to your principles: When setting up a relationship with a new supplier it is important to be clear about what you expect from them at the outset. Businesses should emphasise any ethical expectations, alongside any commercial ones. If sub-contracting is against the rules, make this clear and part of any contractual agreements. Tell the supplier what will happen if they are found to have breached the rules. |
| Use the 'how would it look to you?' test: If you are unsure about whether activities conducted by a particular supplier should be tolerated or not, consider how you would feel if you could see it happening for yourself. The trouble with complex supply chains is that they distance us from what is happening so we feel one step removed and less responsible. In most cases, if business decision-makers could see it happening in front of their own eyes, they would probably feel differently about it. | Use the 'how would it look to you?' test: If you are unsure about whether activities conducted by a particular supplier should be tolerated or not, consider how you would feel if you could see it happening for yourself. The trouble with complex supply chains is that they distance us from what is happening so we feel one step removed and less responsible. In most cases, if business decision-makers could see it happening in front of their own eyes, they would probably feel differently about it. |
| Use your buying power to good effect: Thanks to market globalisation, modern corporates have significant power to exercise a positive influence in the countries they buy from and trade in. Recognising this is the first step to leveraging this benefit in developing economies. As a big firm at one end of the buying chain, you shouldn't be afraid of getting involved at the other end of the supply chain by being prepared to visit suppliers and operate with them to improve working conditions or contribute to the local community. | Use your buying power to good effect: Thanks to market globalisation, modern corporates have significant power to exercise a positive influence in the countries they buy from and trade in. Recognising this is the first step to leveraging this benefit in developing economies. As a big firm at one end of the buying chain, you shouldn't be afraid of getting involved at the other end of the supply chain by being prepared to visit suppliers and operate with them to improve working conditions or contribute to the local community. |
| Communicate your ethical achievements: Ethical consumerism is on the rise and buying decisions within every industry sector are increasingly influenced by ethical considerations. Make the most of this by ensuring that your customers and their markets know what you are doing and how your business is actively involved in supporting global development initiatives. | Communicate your ethical achievements: Ethical consumerism is on the rise and buying decisions within every industry sector are increasingly influenced by ethical considerations. Make the most of this by ensuring that your customers and their markets know what you are doing and how your business is actively involved in supporting global development initiatives. |
| Roy Williams is managing director at Vendigital, a firm of supply chain consultants operating globally and across industry sectors. | Roy Williams is managing director at Vendigital, a firm of supply chain consultants operating globally and across industry sectors. |
| This content is brought to you by Guardian Professional. To get more articles like this direct to your inbox, sign up free to become a member of the Global Development Professionals Network | This content is brought to you by Guardian Professional. To get more articles like this direct to your inbox, sign up free to become a member of the Global Development Professionals Network |
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