Supply Chain Ethics

A recent survey found more than four in five consumers admit the ethical standards of retailers matter to them.

And, given Green Retail World reported that one fifth (21%) of UK retailers cancelled suppliers over ethical and sustainable standards in 2021, the need for businesses to ensure their supply chains are ethically sound to avoid losing customers and revenue, has never been more important.

But with ethical standards and regulations constantly changing, how do businesses maintain clear visibility of their supply chain and its ability to remain in line with such regulations and standards.

The first point for any business is to understand the term ethical supply chain.

What is an ethical supply chain?

It’s a supply chain that focuses on CSR (Corporate Social Responsibility) requirements, and works to ensure suppliers who provide products and/or services, treat their workers and the environment in an ethical way.

While businesses might think this area of supply chain management might only exist if the chain ventures beyond the UK shores, it would be a false and potentially dangerous narrative to follow.

When talking about ethics in the supply chain, the following elements are generally focused on:

  • Freedom of employment
  • 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

How important is having an ethical supply chain?

Organisations of any size must be aware of the laws surrounding supply chain ethics, understand where their own business fits in to this and act appropriately.

An ethical supply chain is no longer just a ‘nice to have’, it is a necessity to succeed, or even survive, as a business.

Many businesses aim to understand their own ethical values and ‘categorise’ this in order to understand areas of increased risk within their supply chain.

This code of ethics is often produced for suppliers to comply with, to help the wider supply chain comply with ethically sound business operations.

Can a business fall foul of supply chain ethics?

Yes, but it’s not as easy as that. If a business develops a code of ethics for all future supplier contracts, it’s only addressing half of the problem.

Historical contracts could fail the new code of ethics, so it’s vital regular audits are carried out on all suppliers, no matter how strong or lengthy the relationship.

And, the often forgotten about suppliers (i.e. second and third tier) who supply a business’ direct suppliers also need to be checked as they are a vital part of the wider supply chain.

Checking that all areas of a business’ supply chain are abiding by its ethical code of conduct is vital.

What ethical supply chain code of conduct could a business learn from?

Patagonia has built its foundations around a reputation for being ethical, environmentally friendly and utilising ethical sourcing practices.

Patagonia does not only claim that it is ethical, it also evidences this by providing a detailed list of suppliers in the final stage of production and information from supplier audits, covering topics such as forced labour, gender equality and freedom of association.

With a clear view of their supply chain and by conducting supplier audits, Patagonia is able to stay up to date about the ethical stances of their suppliers, allowing the business to act proactively to ensure end-to-end ethical compliance of all suppliers.

Not only does Patagonia exceed the requirements of laws around ethics in the supply chain, it also takes the consumer on the journey with them.

With visibility of its supply chain Patagonia is able to provide consumers with the raw data and facts from its journey; and it’s this honesty helps to drive their competitive advantage and strengthen their consumer base in the flooded market of activewear, particularly given the fact 80% of buyers are ethically aware.

But how does a business make the move towards an ethical supply chain and follow the likes of Patagonia?

The simple answer is technology is a business’ ally, but here are a few actions which can be taken:

  • Simplify processes
  • Efficient planning
  • Increase visibility into supplier actions, at all tiers
  • Monitor environmental risks

The role that technology now plays in in creating an ethical supply chain can’t be underestimated.

It’s essential in supporting the above actions and is where the software platform Calathea comes into its own.

By providing data driven insights, Calathea provides the visibility a business needs to ensure its supply chain is ethically sound, and will continually stand up to the ever-changing standards and regulations.