Why Ethical Supply Chains Have Become a Business Priority

Ethical and social issues in supply chains have taken the centerstage in the business world. These have led businesses across industries to dig deeper into their operations, especially those in the supply chain that aren’t actively monitored.

How are raw materials manufactured? Which materials are being used? Who is manufacturing the products? Are vendors monitoring emissions? What steps are they taking to reduce their carbon footprint? These are some of the questions that are being increasingly discussed to evaluate suppliers.

In fact, supply chains are now seen as a true reflection of how a business prioritizes ethics. Most businesses understand this growing sentiment and are closely monitoring their supply chains in addition to internal operations.

What is an Ethical Supply Chain?

In the past, too much emphasis on containing costs brought to light instances of exploitation and malpractices in supply chains. Such instances raised questions about how businesses may evade ethics to produce goods cheaply.

Ethical supply chains provide a shield against such issues and help businesses and supply chain partners uphold values and responsibilities toward society and the environment.

An ethical supply chain strives to achieve the highest levels of responsible and sustainable operations. To achieve this, businesses must carefully evaluate suppliers and ensure that they share the same ethical and social concerns.

Businesses can also establish a supplier code of conduct to state their expectations. The code of conduct can include labor standards, human rights, health and safety, and environmental regulations. It can also include the consequences of not complying with the code of conduct.

Here are some of the key traits of a business with an ethical supply chain.

• The business has deep visibility into tier 1 as well as lower tier suppliers. It can trace where products come from as well as the conditions under which they are made.
• The business has a clear understanding of which materials are used in production. Additionally, it can establish that standard production practices are followed and there isn’t any deviation.
• The business makes optimum utilization of available resources and conserves water and energy, ensuring minimum wastage.
• Stakeholders have a clear understanding of the supply chain’s social and environmental impact.
• There are mechanisms in place to measure and monitor supply chain emissions.
• Stakeholders can ensure that human rights are protected and there are safe and hygienic working conditions in production facilities.

How Ethical Supply Chains Can Provide Competitive Advantage

Changing consumer preferences have led businesses to increasingly focus on supply chain operations. Consumers are well-informed and becoming increasingly conscious of ethical and social conduct of their favorite brands. They expect brands to be more transparent about how they source their products. Additionally, they want businesses to take steps to identify and minimize their social and environmental impact.

Government authorities are also closely monitoring steps businesses are taking to meet the desired ethical and social standards. As part of this initiative, they are determining how and from where businesses are sourcing their goods. For example, goods shipped from certain regions can now be barred from entering U.S. ports because of concerns about how and where these goods are manufactured and by whom.

The Time to Act is Now

The pressure from consumers is mounting, and brands must act quickly to retain consumers and gain advantage in a highly dynamic and competitive market. In this endeavor, they must increase transparency in their supply chains and reveal the environmental impact of their products.

Having an ethical supply chain also presents an opportunity to attract new customers. Given the increased consumer expectations around ethics and sustainability, smart businesses are looking to promote their supply chains in the same way as their products and services. In other words, supply chains can be a key USP for businesses in today’s highly competitive market.