The supply chain is the main strategic element for the growth of businesses and companies. Satisfying the needs and demands of customers with sustainable and ethical SC operations has become the top priority of businesses and companies. APICS research study showed that 83% of the SC experts think that ethical approaches are highly significant to their businesses. Today, we’ll discuss ethical supply chain management; key elements of the ethical approach.
What is Ethical Supply Chain Management?
Ethical supply chain management is the method of conducting the highest level of sustainable and ethical operations. The ethical SCM deals with three areas social responsibility, environment, and economics; it focuses on the following;
- Spreading awareness about the sustainability of the environment
- Procurement and ethical sourcing
- Anti-corruption and bribery
- Standard Working hours and fair pay
- Hygienic and safe working conditions
- Removing slave and child labor
It has become significant to ensure ethical operation for all the businesses in the complicated SCM processes and networks. It ranges from trading partners, customers, and suppliers to employees.
However, sportswear manufacturing companies can’t afford to take the obligation of the disruption in the SCM processes. SC allows businesses and companies to take advantage of other areas of the company. Visible and ethical SCM operations would help to make sure that the company’s stakeholders are implementing ethical practices and strategies.
Key Elements of Ethical SCM
Some of the key elements of ethical supply chain management are as follows;
Sourcing Ethically
Companies should evaluate their suppliers to make sure whether they’re implementing environmentally sustainable strategies. Many SC companies and suppliers have accepted the fact publically in their annual and quarterly reports that their operations are sustainable. Companies should analyze the mature approach of their suppliers and know the areas that need evaluation.
Various technological tools and supplier relationship management software allow suppliers to gather information and data about the certification and capabilities of their internal and external partners and stakeholders. It offers a key insight into the potential risk factors and analyzes the compliance level of suppliers.
Communication with Problematic Supplier
Often companies establish long-term strategic relationships with suppliers. It requires continuous and regular back-and-forth communication to ensure effective collaboration. However, when issues and problems come up, it requires open communication with the problematic supplier and vendor. The focus of the discussion should be on the supplier’s ethical position.
It doesn’t mean that you should stop collaborating with the suppliers that are implementing the ethical practices and strategies. Your business has chosen the specific suppliers for various reasons and factors in the first place like cost, performance, quality, and various other reasons and factors. The procuring company should make the supplier streamline their brand values with their client.
In order to promote continuous improvement of the suppliers, you should have a comprehension of the whereabouts of the suppliers, and explain their priorities and goals.
Integrating & consolidating
Strategic supplier relationship management has shown that some less significant suppliers would emerge and accumulate over time. The risk factor is lower while dealing with integrated and consolidated suppliers, and the procuring would have a great influence over the ethical practices of the suppliers.
Over-integration and consolidation decrease the flexibility of the supply chain network and processes and result in the form of shortages. However, if you decrease the long tail supply chain network, then it allows companies to decrease risk factors and manage their spending.
Adopting Transparent Technology
Technological tools and software offer you recommendations about the global trade compliance of suppliers and relationship management. The latest blockchain-based service technology amplifies transparency and visibility among suppliers and the procuring companies. However, if you are dealing with suppliers and maintaining a ledger with blockchain technology, then it helps you to validate product lifecycle, product provenance, lineage, and lot.
The demand for SC risk software has been increasing significantly for the past few years. Often, it employs machine learning and AI (artificial intelligence) to recognize SC partners and vulnerabilities in their systems. It is a great tool and solution; companies should integrate it with their existing SC system to recognize risk factors.
Selling Supply Chain
The consumer market puts great pressure on businesses and companies, and it amplifies the risk of legal exposure and jeopardizes the reputation of the company. Perhaps you would have observed that various companies are promoting ethical SC practices as a main differentiating factor than to the big competitors that have complicated SC networks. As a result, companies are selling their SC network and processes just like they sell their products and services.
Conclusion: Ethical Supply Chain Management
After an in-depth study of ethical supply chain management; we have realized that ethical SCM is highly significant for the growth of modern businesses. If you are learning about ethical SCM practices, then you should keep in mind the abovementioned definition and key elements involved in the SC practices.
References
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