Consumers and professional buyers are demanding higher standards. What does it mean for the supply chain?
Buyers who are socially responsible in their personal lives often take those behaviors and attitudes into the workplace, leading to a growing influence of personal values in the commercial marketplace.
But they underestimate their power to effect positive social change in the supply chain through their influence of spend and strong supplier relationships.
The social supply chain has evolved from the simple greening of the supply chain, when companies bought copy paper with a high recycled content or transitioned to water-based chemicals.
It now addresses an increasing array of social issues, including human rights, sourcing with ethical suppliers, working with historically underutilized businesses, combatting corporate malfeasance and incorporating strong environmental standards in supplier selection criteria.
Social meets business
The model of the social supply chain has its roots in the concept of corporate social responsibility, where a company strives to align their social and environmental activities with its business purpose and values.
Companies are increasingly incorporating social principles into their business strategies to achieve competitive advantage, incorporating the so called “triple bottom line” issues of economic prosperity, environmental quality and social equity as part of their business goals.
“Socially responsible consumers tend to make deliberate choices in the products and services they purchase.”
Consumers are increasingly sourcing with a social conscious, paying as much attention to the social contract as they do price and using their power to reward — or penalize — companies that don’t meet their individual social criteria.
Shoppers with a high degree of social consciousness base their buying decisions on their perceptions of value, which includes cost and quality but also how a product or service fits into their social consciousness.
Socially responsible consumers tend to make deliberate choices in the products and services they purchase and typically support businesses that are socially conscious themselves.
We see the spread of fair trade coffee and tea and increased transparency in the apparel supply chain.
Even the “locavore movement” is a form of social supply chain management where chefs include the origin of their fruit, vegetables, fish and meat on their menus.
What it means for procurement
While consumer-based socially conscious consumption is expected to go more mainstream over time, the professional buyer who can make a significant and immediate difference today by supporting the social supply chain.
By abandoning their low-cost — at all cost — procurement strategy, professionals can use suppliers with higher ethical and social standards while still maintaining their strategic cost and supplier performance approach.
“Socially conscious consumption is going mainstream, professionals can make a significant difference today.”
Increasing the use of socially responsible suppliers is not a far-fetched idea that will upend your supply strategy.
Many of your current suppliers will meet basic social criteria by providing a safe workplace, paying a fair wage, treating employees with respect, managing and reducing the use of hazardous chemicals and working with an ethical supply chain themselves.
Buyers can reinforce their support for companies with good behaviors by spending more with them. Or they can take their business away from those who violate baseline social standards.
Many problems in the social supply chain such as environmental failures and human rights violations seem to originate in low-cost sourcing countries. But social issues are not limited to just offshore suppliers.
There are plenty of domestic suppliers whose violations can be just as egregious.
A widespread problem
I’ve visited U.S.-based suppliers where employees were restricted from using the bathroom, ate lunch in bug-infested “kitchens” and incurred injuries due to unsafe conditions.
I’ve seen machines without safety guards, pallets resembling a “Jenga” game, employees without hearing and eyesight protection and in several cases, the discharging of toxic waste into a body of water.
I’ve worked for companies where executives were proud of their cheating.
While these companies were actively violating established legal and social standards, they were also violating my personal standards. I could not support a company with those kinds of business practices.
As an agent for my company, I have the fiduciary power to spend my company’s money effectively, ethically and wisely.
“Social supply chain is gaining global traction as consumers, and professionals demand higher standards. ”
Back to the supply chain
These violations were in the visible supply chain. What about the downstream suppliers where I have less clout and visibility into the situation?
My hope is that my prime supplier chooses suppliers who hold high moral and ethical standards. And I hope their suppliers do the same, but it’s not an easy process.
The social supply chain is gaining global traction because consumers, and professional buyers, are demanding higher standards.
It’s time for everyone to join them.
Rich Weissman is an experienced supply chain management practitioner and educator who works with businesses to build scalable and sustainable supply chain strategies. Rich writes and speaks extensively on issues impacting the global supply chain.
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