ETHICAL SOURCING
83 percent of supply chain specialists say ethics are extremely or very important for their company, according to APICS, a supply chain research group.
When you consider the brand and reputational damage – not to mention the legal repercussions – of unethical labor, it’s simple to see why. Even now, unethical supply chain practices have been discovered in major firms.
In the apparel industry, for example, 93% of corporations claim to have no understanding where their cotton comes from. This might be a costly error. When a sportswear manufacturer was found to be exploiting child labor, the company was forced to pay millions of dollars in fines and, more importantly, had 15% of its value wiped out.
Nonetheless, this company has become a shining example of what can be achieved when ethics are integrated into the supply chain. An ethical supply chain ensures the highest levels of ethical and sustainable operations.
APICS article :https://www.scmr.com/article/the_ethical_supply_chain
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So what exactly is ethical sourcing?
Ethical sourcing is the practice of ensuring that products are procured in a responsible and sustainable manner, emphasizing fair treatment of workers, safe working conditions, minimized environmental and social impacts, and adherence to specified standards throughout the supply chain. It is the sustainable and responsible approach to managing your supply chain and sole sourcing.
Some of the best examples of ethical sourcing are often found in companies and organizations that deal with the procurement and sourcing of food and commodities. For instance, companies sourcing products like coffee, chocolate, or bananas might opt for Fair Trade-certified suppliers. Fair Trade certification ensures that farmers receive a fair price for their products, have access to credit, and are able to invest in their communities².
There are also several companies that have earned outstanding reputations by going the extra mile to achieve ethical sourcing and manufacturing. For example, Patagonia, an American outdoor clothing company, has used organically grown cotton for all of its products since switching from pesticide-heavy cotton crops in 1994. The company altered its entire supply chain to ensure environmentally friendly, safe working conditions. Furthermore, they provide excellent health insurance and give paid paternity and maternity leave for all of its workers¹. Patagonia has built a very strong reputation for being ethical, environmentally friendly, and using ethical sourcing.
Another example is Starbucks. The company is committed to 100% sustainably sourced coffee and uses a system called C.A.F.E. (Coffee and Farmer Equity Practices) in order to optimize its sustainable sourcing. There are four ideas at the heart of Starbucks’ C.A.F.E.
The four ideas at the heart of Starbucks’ C.A.F.E. are product quality, economic accountability, social responsibility, and environmental leadership. The company works with farmers to improve their coffee-growing practices and ensure that they are paid fairly for their beans. Starbucks also invests in farmer support centers, which provide resources and training to help farmers improve their yields and the quality of their coffee.
In conclusion, ethical sourcing is an important practice that can help companies to ensure that their products are produced in a responsible and sustainable manner. By working with suppliers who adhere to high standards of worker treatment, environmental protection, and social responsibility, companies can help to create a more just and sustainable world. Examples of companies that have successfully implemented ethical sourcing practices include Patagonia and Starbucks. These companies have demonstrated that it is possible to achieve both business success and positive social and environmental outcomes through ethical sourcing.
Some of the issues in Ethical Supply Chains include:
- Human rights and labor conditions: Ensuring that workers are treated fairly and have safe working conditions.
- Environmental responsibility: Balancing the goal of speedy delivery with a commitment to reducing the carbon footprint.
- Sustainable sourcing: Considering suppliers’ social, ethical, and environmental performance.
- Supplier visibility: Gaining a better look into tier one, tier two, and tier three suppliers (suppliers of their suppliers’ suppliers) can be incredibly complex, but for U.S. companies, it’s now a legal requirement.
- Human trafficking: Force, deceit, or other forms of coercion are used in human trafficking to obtain labor or commercial sexual activities.
These are just a few examples of the many issues that can arise in Ethical Supply Chains.
