Posted by: malstott | May 14, 2013

Ethical Supply Chain Management

BANGLADESH-BUILDING-DISASTER-TEXTILEReshma was pulled out of the wreckage of the Bangladesh factory fire after 17 days. She survived in a dark 8 foot by 10 foot space with room enough to move and food and drink enough to survive. After finding over 900 dead in this factory, the miracle of Reshma brought joy to the rescuers. This factory garment worker did not give up her life making our clothing but somehow she puts a face on the ethical questions troubling me and many others who work in the field of supply chain management. Should we know when the factories making our products are unsafe? Do we have a responsibility for our far flung supply chains? I believe that the answer has to be yes. But fulfilling that responsibility is a difficult task.

There are attempts to organize companies around the principles of safe, humane, ethical working conditions. In the electronics industry many companies are members of EICC which is the Electronic Industry Citizenship Coalition. Their website states that “the EICC is a coalition of the world’s leading electronics companies working together to improve efficiency and social, ethical, and environmental responsibility in the global supply chain.”  HP is a member and also has its own social and environmental standards and policies. Since 2005 HP has audited over 700 suppliers in its 1000 plus company supply chain. During those audits non-compliances are found. The offending company is to fix the non-conformance and report back upon closure. Is that enough? Other companies do more or less work on this topic. How can you judge what is enough? Can we expect to get to zero non-compliances? Perhaps our goal should be an ever decreasing number of non-compliances approaching zero.

The garment industry is trying to get a coalition together for monitoring and compliance throughout the supply chain. It is called IndustriALL. There is some dragging of feet on joining. Gap is not ruling out joining this group but so far it is doing its own work to monitor factories for safety. After the Bangladesh fire there is more momentum around this topic.

And what about human trafficking? An organization called Not For Sale is focusing on this topic. Their website states that this is a $32B business and it is tied to almost every product we use. As consumers we don’t have the information to even vote with our dollars. This organization is stressing the need for transparency. If we know where the problems are and they are visible to consumers there would be a move away from those markets. The economic pressure shifted apartheid policies in South Africa and it can make a difference here as well.

What are the “to do’s” for supply chain leaders? Here are the few I can suggest:

  1. Join the coalitions available. They aren’t perfect but they at least get a collective body to call attention to a problem.
  2. Create transparency in your own supply chain. Know who your suppliers are and who their suppliers are and who their suppliers are…Spend the money to audit.
  3. Keep this high on the agenda. Talk about supply chain design with this in mind. Cost drives many decisions but take the total cost into account. Understand the cost of the monitoring required. Put the right system in place to do the right thing.
  4. Participate in the dialogue. Talk to other leaders about this topic. Engage with the government and with non-profit organizations. Take a position.
  5. Design your supply chain with ethics in mind. Enough said.

“You have just dined, and however scrupulously the slaughterhouse is concealed in the graceful distance of miles, there is complicity.” 
―    Ralph Waldo Emerson

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