Why it’s important
Don’t let the cost of doing business force your company to abandon its values. There are many incentives to avoid using unethical supply chain practices.
There are several reasons you may want to move parts of your supply chain overseas. Outsourcing cheap labour can increase your firm’s profit margins or help keep your company afloat. Also, working other countries means less strict regulations than you face in your home country. This can be attractive for those who are looking to reduce their expenses.
But, the incentives of global expansion come with their own cost. These low wages and a lack of regulations may benefit firms. However, this benefit comes from taking advantage of their employees and the environment.
Companies that are ethical and take social responsibility will see more success in the long run. Ethical firms build strong relationships with their customers and establish a good reputation. They will also avoid future legal implications. This will encourage investment from socially responsible investors and benefit your stakeholders.
Ensuring your supply chain follows the ethical guidelines of your firm is not a simple task. As your supply chain expands globally, it will become more complex to safeguard it from unethical practices. After all, more suppliers means more to manage.
Here are five tips that can help your company avoid unethical supply chain practices:
How visible is your supply chain? This is a vital factor to push ethical standards. Without visibility, how can you ensure that your suppliers are acting responsibly? Are they meeting the standards you have set? Transparency is key in preventing an unethical supply chain.
But, the distance between you and your global suppliers can make this visibility difficult. As a result, it’s hard to tell if your standards are being enforced. Having transparency within your supply chain will allow you to detect any unethical supply chain behaviour.
2. Mapping Out Your Supply Chain
You know who your direct suppliers are, but do you know who they buy from? Mapping out your supply chain can give you an idea. This will increase your overall visibility of your supply chain. Also, you can ensure ethical practices in the entire chain beyond your direct supplier. Just because your supplier is ethical doesn’t mean the products are. Mapping gives you clarity of each step of your supply chain.
Moreover, this can help your firm make improve upon processes. For instance, it can give you a competitive edge by getting rid of non-value activities from your supply chain. Once you have a big picture, you can see what you need and what you don’t. This is one of many benefits of being socially responsible.
Sending this to your suppliers as a safeguarding practice can be valuable. However, filling out a questionnaire does not ensure your suppliers are actually in line with your beliefs. For example, suppliers may respond dishonestly or not assume responsibility for the standards of the companies they purchase from.
Your suppliers should be treated as a part of your company. You are in charge of making sure that they are socially responsible. But, sending this form should not be the only method you use. Instead, use this to filter out unsuitable suppliers or as a check-up between audits.
Auditing your suppliers will allow you to make sure that they are operating ethically. This way, you can ensure that your suppliers are compliant with your company goals. You can also use this to find any issues you may not have addressed.
Auditing your suppliers will ensure that your products will meet the expectations of your customers. This creates brand loyalty, as your customers will know that your products are good quality and ethical. Also, auditing reveals the processes of your suppliers. You can discuss to improve product quality, and this will help establish a good relationship with them.
Auditing can be a time-consuming and expensive process for your firm. One way to reduce the cost is to work with your competitors to audti common suppliers. This way, all parties benefit.
5. Reward Suppliers
Rewarding your suppliers can be a useful incentive. For example, reward suppliers that are improving ethically. Perhaps it’s better working conditions or increasing employee wages. This demonstrates to current and future suppliers that you are serious about being ethical. In addition, rewarding honesty will increase your visibility into your supply chain.