Ethical supply chains: the challenge

Article taken from Supply Management. To view article, click here

Unethical supply chain conditions may not be a new topic but it is clearly a problem that refuses to go away.

In the past month two damning investigations have exposed the exploitation of factory workers in China and human rights abuses in the Democratic Republic of Congo.

So why does unsavoury behaviour persist? According to Dan Rees, director of the Ethical Trading Initiative, sometimes the worst supply chain problems can occur in locations that are the hardest to reach.

"If the raw materials are sourced in countries where the rule of law has broken down, like Congo, it is virtually impossible for retailers to trace their supplies of raw materials down to the source," Rees tells SM.

"In these cases, it can be hard for individual companies to exercise sufficient influence on their own. Industry-wide approaches are needed, involving all key players from retailers down to the mines themselves, as well as governments. We're already starting to see this kind of collaboration in the cotton industry."

Fiona Dowson, senior sustainability advisor at Forum for the Future, insists many managers still "underestimate" what is involved in reducing unethical issues in the supply chain. "It takes much more than an annual supplier questionnaire to make progress," she says.

"Leading companies have comprehensive audit programmes in place and will sometimes employ specialists to audit the auditors. They essentially do more in-depth audits, talk to workers, do more detailed interrogation of records to try and get behind the fake record keeping systems which some suppliers use."

Purchasers have an essential role in turning things around, according to Traidcraft's senior policy advisor Fiona Gooch. Forced overtime and low pay in factories come as no surprise when suppliers are under enormous pressure in terms of cost and delivering goods against short lead times, she points out.

To combat this, buyers need to take immediate action. "The important person is the purchaser - the person the supplier will please, the person they will listen to," Gooch says.

"We need to be providing suppliers with the opportunity to provide anonymous feedback about purchasing practices and put in place systems to address those things."

Gooch recommends buyers reward suppliers who take the initiative to improve conditions for their workers, even though it may be unusual. "It will send a message to the supply community that the company is serious."

Blake Lee-Harwood, an independent consultant on sustainable supply chains suggests a dual-pronged approach. "What works well is where there is some kind of trusting relationship between buyers at the end of the chain and some kind of civil society organisation - such as an NGO - representing workers."

However, Rees warns that ethical trade should not be about "policing" suppliers. "Buyers should tell suppliers that although they don't have to be perfect, they do have to be willing to listen and ready to try new things."

To read more from Supply Management on the issue of ethical supply chains, click here

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