What are the most important supply chain ethics? 3 experts weigh in

The low-cost at-all-cost model is losing steam. While cost savings are critical to any business, equally important is brand reputation, and with that comes the need for corporate social responsibility.

Consumer awareness sustainability and forced labor in the supply chain is driving organizations to take the next step beyond compliance into ethics.

We posed the question to three consultants: In today’s world, what are the most important supply chain ethics?

The answers below have been edited for clarity and length.

Pam Fitzpatrick

Senior Director, Analyst at Gartner

Fitzpatrick: “Waste not.” It’s the principle that first comes to mind because it unites so many concerns that we’re helping supply chain leaders address.

Business has operated with a narrow definition of waste. In some cases, we’ve offloaded the responsibility of dealing with waste to others. The public outcry about plastic and packaging waste is a signal of changing expectations about our role in fixing these problems. Companies that ignore the call for action will be perceived as unethical, putting their reputation in peril.

Today, all supply chain leaders should rethink their role in preventing waste. We hear the excitement about the circular economy as a way to preserve natural resources. But it’s time to widen our view of waste to go after three other “waste not” opportunities:

• Don’t waste your talent. If you’re not actively cultivating diversity and inclusion, you are underutilizing your team.
• Don’t waste your data. In a recent survey of procurement leaders, we found that only 68% are embedding their suppliers’ sustainability data into their supplier selection process. If you’re not applying the data that you’ve collected to drive better business decisions, you’re wasting it.
• Don’t waste your influence. Running global supply chains means that our decisions have consequences for people, communities and environments around the world. If profitability is your sole purpose, you’re wasting the full potential of your intellectual capital to create a positive impact in the world.

What’s heartening about this principle is that every supply chain leader can put it into practice.

Pete Guarraia

Partner, Leader of the Global Supply Chain Practice at Bain

Guarraia: At a minimum, supply chain managers must comply with all regulatory requirements that apply in the jurisdictions in which they operate.

However, the question gets at a set of larger issues that supply chain managers may be wrestling with, such as should they choose to move goods more slowly if it reduces the carbon footprint associated with the mode of shipping?

Another more pressing example might be, how do supply chain managers deal with procuring inputs from countries where low cost labor is used in production?

Dealing with these types of questions will increasingly be at the forefront of supply chain managers’ jobs. I would suggest that the answers lie in broader strategy of the company in which the supply chain manager operates.

More specifically, many companies today are challenging supply chain managers to operate at a higher standard than legally required. Whether it’s on emissions, fair-wage labor rules or sourcing sustainably grown inputs, some supply chain managers and companies are seeking to set new standards and use this to competitively differentiate from other players in the market.

Ultimately the choice is up to the company, but in the future the supply chain manager may be able to help companies define new ethical and operational guidelines.

Mark Hermans

Managing Director at PwC

Hermans: Driving ethical behavior throughout the supply chain is not just the right thing to do, it also makes good business sense. As supply chains are becoming more global and digitally enabled, supply chain managers play a vital role in driving ethical practices across the end-to-end supply chain. Trust, transparency and technology are critical areas to focus on.

Trust: It is essential to build trust with all stakeholders. Customers, employees, business partners and investors are increasingly concerned about ethical behavior. They should be confident that Environmental, Social and Governance (ESG) values, standards and controls based on a clear code of conduct are at the core of a supply chain.

Transparency: This is a key enabler to building trust. Global supply chains are increasingly complex and multi-tiered. Companies should be transparent about supplier practices, sources of supply, working conditions, labor standards and environmental impact.

Technology: As physical and digital supply chains continue to converge, there are important ethical implications. Technologies such as AI, big data, automation, IoT and blockchain provide opportunities but could also raise ethical questions and risks. Data protection, traceability, privacy, job security and decision bias will need careful consideration as new technologies are introduced.

Ethics should not be treated as a “check the box” compliance exercise. It should be top of mind for any supply chain manager to ensure that core ethical values are upheld across the physical and digital supply chain.

 

By Shefali Kapadia – Nov. 11, 2019