How to set up an ethical supply chain

Image by Mircea Ploscar from Pixabay

By Henry Brown

Doing business in today’s society presents a lot of challenges for businesses and manufacturers. In addition to an extremely competitive marketplace, consumers are demanding that businesses move towards ethical and sustainable practices.

A study by Ipsos MORI showed that 38% of consumers are willing to spend more money on products that come from an ethical company. Four out of five consumers feel that the ethics of companies matter to them personally.

Taking steps to reduce your environmental impact and implement ethical policies within your own organization is a great first step but to truly practice what you preach, you need to extend these values throughout your entire supply chain. Otherwise, you’ll likely face scrutiny from existing and potential customers, as well as running the risk of damaging your reputation.

Here are a few ways you can ensure that your supply chain is as ethical and sustainable as possible.

Building blocks of an ethical supply chain

A number of scandals over recent years have brought consumerism and ethical business front and center. Companies involved in poor working conditions, financial malfeasance and exploitation have found themselves the subject of very bad press and consumer boycotts.

Strong, ethical supply chain solutions is usually formed around:

-Environmental awareness

-Ethical sourcing of materials

-Safe working conditions

Fair pay

-Elimination of child labor

-Fair treatment of employees on gender, sexuality, religious, and medical grounds.

-Elimination of corruption and bribery.

Many discrepancies arise through the differences in international law. However, many countries are beginning to adopt the same core values and begin to enshrine these into law. There is still a long way to go but steps are being made. With increased scrutiny by the media and the public, the pressure is brought to bear when poor working practices are identified.

Audit your current suppliers

You may have been using the same suppliers for years. They’re reliable, cost-effective, and provide good service. How much do you really know about them? As part of your corporate social responsibility policy, request information from your suppliers that details how they do business, where they source materials from, are their working conditions safe and do they treat their employees well? Don’t bury your head in the sand over suppliers; not knowing what they are doing isn’t a defense. You have the means to find out and make changes.

Even a quick search on social media and Google should also turn up any potentially issues. You cannot use the defense that you were unaware of what was happening. Your reviews of your suppliers need to be vigorous.

Research potential suppliers

When looking for new suppliers, you want to find those companies that share your values and ethical ethos. You will find that many more suppliers are starting to move towards this method of doing business as it becomes morally and economically essential.

Ensure that they are operating fair and safe working practices and sourcing their materials ethically. They should also have policies in place to ensure that they are also vetting their suppliers.  It’s the only way to be sure of an end-to-end ethical supply chain.

Go digital

Many supply chains are now heavily digitized. This is usually done via a cloud-based environment that allows all points of the supply chain to interact and scale as demand expands or contracts.

Digitization is not only secure and cost-effective, but it also acts as a deterrent to those who would falsify documents or use counterfeit goods.

Many companies are even turning to sophisticated AI to ensure that their supply chain is squeaky clean. Though out of reach of a lot of small businesses, it’s only a matter of time before it filters down to smaller businesses.

Trace shipments

The visibility of products in the supply chain is now extremely detailed. Thanks to advances such as Blockchain and the internet of things (IoT), the entire supply chain can track the conditions and movements of shipments.

At any point, you can track the global position (GPS) and even the temperature of goods being shipped.

This level of detail is invaluable in situations such as product recall and safety concerns. The provenance of each and every component can be traced back to its origin.

Collaborate with other suppliers

The best way to maintain and improve your ethical practices is to work with other suppliers to achieve this. Collaborating as a supply chain, or industry sector can help push change faster than companies working individually.

Creating an ethical supply chain policy

If you are building your corporate social responsibility policy from the ground up, it’s vital that there is buy-in from the very top levels of an organization, no matter how big or small it might be. A CSR policy shouldn’t just be left to the marketing department as a PR exercise, but the ethos must be embedded through the organization.

In addition to the social benefits of the ethical policy, there are a number of additional benefits for companies too. Being seen as a caring, socially conscious organization can attract potential customers. Building efficiencies within a business can save you a lot of money.  It will also make you more of an attractive employer.  In an extremely competitive market for talent, having the edge can make the difference. People want to work for good companies that they can believe in.

If your company competes for contracts in the public sector, then an ethical policy can give you an edge in these cases. Many official contract tenders will award extra points for those companies who can show that they have ethical and sustainable working conditions.

Final thoughts

Doing business fairly and ethically is no longer a luxury. The tide is turning on unethical and dangerous business practices throughout the world.

Companies who continue to knowingly work with these suppliers open themselves up to potential damage to their reputation and reduced sales. This type of damage to your brand is very difficult to come back from.


Henry Brown is an online marketing executive. When he isn’t talking shop, he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.

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