What you need to know about supply chain ethics

7 Aug 2014
Article by Achilles

Supply chain ethics are integral and businesses need to understand what they are and how to maintain them.

More than four in five customers claim the ethical standards of retailers matter to them, according to Ipsos MORI. Thirty-eight per cent also say they will spend more on a product if a company acts in an ethical way.

Indeed, all signs point to the growing importance of supply chain ethics and those companies that can prove they play by the book are likely to rise above the rest. However, what is and isn’t regarded as acceptable is always changing and many companies may need a bumper course in what they need to know about supply chain ethics.

What are supply chain ethics?

As sourcing has become more global, instances of exploitation and malpractice have come to light, raising questions about how ethical corners may be cut to produce goods cheaply

When talking about ethics in the supply chain, experts generally focus on:

Freedom of employment and association

The eradication of child labour

Safe and hygienic working conditions

Appropriate pay and working hours

Humane and non-discriminatory treatment

Anti-bribery and corruption

Environmental awareness

In the past these ingredients of an ethical supply chain were largely governed through the values of individual businesses and countries but over recent decades this has become codified in international law.

What businesses can do about it

Organisations, big and small, need to be aware of the laws governing supply chain ethics and where their own business practice fits in with it.

This latter point requires companies to understand their own ethical values and aims, codify this and root out areas of risk in their supply chain.

Many businesses produce their own ethical supply chain codes, which all suppliers must comply with. The Coca-Cola Company is one such firms and runs ethics and compliance through the Code of Business Conduct. It has the same expectations for their suppliers as employees when it comes to complying with law and acting ethically in all matters.

Transparency is a huge part of ensuring ethics are maintained throughout a supply chain and companies need to know who their suppliers are, also beyond the first tier. Achilles offers supplier management solutions including creating and managing collaborative communities, and supply chain mapping to enable organisations to identify all parties in the supply chain, making it easier to identify instances in their network where ethical codes have not been adhered to.

Business Minister Jenny Willott said: “Transparency should always be at the heart of every business. All companies, including those in the retail sector, need to make sure that they are giving the right information to their customers and are being open about their supply chains.”

“Shoppers more than ever want to know how what they buy got from the factory to the shelf. They are also not afraid to speak up or vote with their feet if they think that those producing their goods are being abused or exploited.”

The golden rule

The golden rule of supply chain ethics is ultimately ‘know your suppliers’. Businesses need peace of mind that those they do business with meet certain standards to ensure their supply chain is above board. All Achilles suppliers are verified by us to ensure they are compliant with regulations and are operationally sound. This helps buyers manage risk and ensure they are working with companies that share similar values.

 

Of course it’s harder to monitor the activity of suppliers overseas and this is where supply chain mapping comes in. Businesses can understand who their suppliers are, who they’re effectively doing business with and can investigate if all parties are complying with their ethical codes. Organisations can also take steps to ensure suppliers are independently verified by Achilles to act as another layer of assurance that conduct is exemplary.


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