How to build an ethical supply chain

Businesses are under pressure to behave more ethically: and especially to understand their corporate supply chain. As a recent Guardian investigation revealed: what we do can create a life or death situation for someone in another country.

An ethical supply chain can be difficult to build. It could require literally years to build it. There’s no guarantee that it will be cheaper either – though as time goes on and more money reaches sustainable establishments, their prices go down.

The long term benefits, however, provide a guarantee against the small-term losses. Good public relations are a particular motivator: which are at risk if human or animal rights violations are uncovered. At such a time, it is impossible to plead innocence: the Fair Labor Association and SedEx exist in part to help companies root out sustainable and ethical suppliers and fund independent investigations into uncertain ones.

What’s required of a business to establish a sustainable supply chain? Globalisation means much of our raw produce comes from abroad, and that means a need to appreciate the difficulties of investigating a supplier: this takes time and investment.

Make a plan

A plan commits the company to action and sets objectives which guide it. The United Nations Global Compact set out the best formatted plan in their white paper ‘Supply Chain Sustainability.’ “Commit” to understanding your supply environment (i.e. who, where, what, of suppliers) and set expectations.

Be critical

Most likely if you’ve come this far, you already are. You already think in terms of doing good and the fiscal advantages of doing so. But just because you’ve found a family-owned coffee plantation in Panama, which employs local people and pays them a good wage – doesn’t mean it’s the one for you.

Consider work hours, conditions and worker’s rights. Question industry-specific issues like use of pesticide, factory safety protocol etc. Consider sub-tier suppliers: where do the suppliers get their supplies from?

Seek peer reports on a specific company or product and make use of the resources of those in the know, such as local governments or institutions you believe to be impartial – or even peer companies. Furthermore: be critical of yourself, and try and follow benchmarks set by your peers.

Look for infrastructure already present in these suppliers as well, which is proof that they’ve fielded these requests before and, hopefully, dealt with any issues that arose.

Charlie Ross, founder of UK-based ethical fashion/textile supplier Offset Warehouse says: “Where a supplier has stated that they are fair-trade or organic etc, we ask for certificates. The most widely recognised certifications we have on [our] site are Fairtrade, Global Organic Textile Standard (GOTS) and WFTO – the World Fair Trade Organisation.

“If manufacturers have a slightly less recognised certifier we wouldn’t necessarily exclude it, but we’d make it very clear on the site who the certifying body was.”  

Create a healthy business relationship

Understand your supplier’s situation: how many people they employ, how many clients they have and how established they are. Think about cultural expectations of what a business transaction is. In the UK and US we employ our version of ‘professionalism’ – a standard of behaviour with its invisible lines and transgressions. 

In different countries these are different. For instance in much of east Asia building intimate friendships that establish trust are important in maintaining a long-running business relationship – exactly what you want from your suppliers.

Be open and honest with your suppliers about your own business practices and when problems arise: deal with them. You’re ‘wandering off the beaten track’ and there’s no guarantee it will be easier.

Go with the flow

Perhaps a fear of a lack of professionalism is keeping you back. Some companies might associate smaller outfits with informality and unprofessionalism and prefer to work with firms of a similar size to the itself. While there’s no guarantee this is the case, you might be expected to ‘go with the flow’ a bit more.

This might encourage a shriek of terror from product managers and distributors – but it doesn’t need to. Ross says while she’s had to make this concessions, there have been unexpected benefits. “By its very nature, a sustainable supply chain creates a more sustainable business!”, he says. 

“You don’t have to worry about a supplier not delivering on time, because you haven’t put those time pressures on them that would make them lie about it. You don’t have to worry about that supplier going out of business and not being able to fulfil next month’s orders.”

The bottom line is that this isn’t just something for luxury brands or necessarily healthy-living brands who have to live up to a reputation of being caring. It’s a demand which the public has made all companies culpable to. Ross says: “No one wants to buy a product made by someone who died making it. Smart CEOs are making smart decisions to begin implementing changes now.”

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