Why an ethical supply chain is critical to keeping your business viable

Why an ethical supply chain is critical to keeping your business viable

Failure to ensure responsible and ethical sourcing can do irreparable harm to your corporate reputation or worse, cause your customers to turn to alternative brands.

By on

When managing supply chains, it is increasingly becoming important to recognise the impact of their activities.  While organisations may have been slower to act, discerning consumers across APAC are now demanding change and action from the brands they buy from.

How can businesses do better in ensuring an ethical supply chain? How can technology help?  What companies have shone the light in the path towards responsible sourcing and supply chain management?

George Harb, Regional Vice President for Business Ecosystems, APAC at OpenText – which recently did a poll comparing data on ethical supply chains with respondents in several APAC countries – shares more on these issues in an interview with iTNews Asia.

iTNews Asia: A lot of corporate ethics and compliance programmes do not extend to many supply chains in Asia. How important is the need for a company's supply chain to be responsible and ethical? How much is this need driven by the community today?

In today’s business environment, a company will often find itself needing to show that it has a corporate social responsibility strategy in place. This is being driven heavily by the world’s largest organisations who are often making it conditional to any business relationships or transactions. A majority, in fact 95% of 250 of world largest corporations all have CSR reports in place.  

In many cases the need for an ethical supply chain is being driven by the consumer who seeks to purchase goods from brands that are seen to be trustworthy in terms of how they source and manufacture their goods.

iTNews Asia: How can technology help make supply chains ethical?

Technology can be used across various parts of the supply to chain to support ethical sourcing. Delivering an ethical supply chain requires extremely high levels of transparency and visibility into an organisation’s operations and that of its suppliers and their suppliers

For example, at OpenText we provide customers with access to a Global Partner Directory, which provides 100,000s supplier profiles, to make it easier for companies to identify and select suppliers based on ethical search criteria. Once suppliers have been chosen, we provide secure digital identities to every supply chain participant, ensuring that only selected suppliers can operate within the company’s ecosystem. 

This digitisation of 100% of our document exchange further supports an organisation to not only eliminate paper documents but also ensures that its trading partners have the same level of digitisation. Raw materials and finished goods can also be tracked across the supply chain and retained in a blockchain. This helps minimise inventory wastage.

iTNews Asia: What do you see as the benefits of an ethical supply chain? Can you cite  examples of companies that have benefitted?

For Broadcom, a semiconductor company that makes products for the wireless and broadband communications industry, visibility into the sourcing of raw materials such as gold that is featured in many of the components that they manufacture for other companies is important. Gold is one of four recognised conflict minerals, in addition to tin, tantalum and tungsten.

Some countries such as the US have implemented a conflict minerals reporting process where companies are mandated to share where parts and raw minerals such as gold are sourced from. This impacts all high-tech companies including Broadcom where it is in their interest to ensure ethical sourcing of goods from reputable sources as involvement in any unethical practice can impact their brand and potential business opportunities. 

Another example is a large CPG company that works with reputable suppliers of coffee beans in order to manufacture their products in all regions of the world. Initiatives have been set up with technology such as blockchain and IoT to track goods as they are transported through the supply chain. CPG is leading the market in terms of food traceability across their supply chain. Whether manufacturing food, clothing or high-tech goods, knowing the provenance of how goods are sourced is critical to the ethical and brand reputation of many companies. 

 
 
 
 
 
 

Media and local governments all indirectly play a part in educating the consumer on what to look for in an ethical product and why it is important to the whole retail ecosystem. All companies should play their part in establishing an ethical supply chain and therefore avoid any negative press that could influence today’s consumer.

-George Harb, Regional Vice President for Business Ecosystems, APAC at OpenText

 iTNews Asia: What are some observations from recent polls on the business case for ethical supply chains in Australia, Singapore and India? What does this mean for businesses?

Across Australia, Singapore and India, the overall observations from the OpenText survey found that majority of consumers would never buy from a brand that was accused of working with unethical suppliers and instead, would look at finding an alternative brand that engages in responsible sourcing.

  • Consumers in Australia (48%), Singapore (53%) and India (45%) admit that knowing where a product has originated from or where parts are sourced is important to their buying decision.
  • Over three quarters of those surveyed are willing to pay more if their product has been ethically sourced or produced. In India, out of the 94% of those willing to pay a higher price, over 65% are willing to pay a premium of more than 25% to 50%. 
  • Across Australia (65%), Singapore (75%), and India (79%), consumers agree that businesses have a responsibility to ensure their supplies abide by an ethical code. 
  • Consumers in India (80%) felt that the government should start introducing regulation that will hold a business more accountable for responsible resourcing. 

It is evident that there is a rising demand by consumers for companies to have ethical sourcing practices and businesses and supply chain professionals must be ready to rise to this challenge.

However, no one business is the same and brands cannot all take the exact same approach towards supply chain ethics but instead, start discovering and investigating what is the best practice for themselves. They need to look for the unique needs in their own market and then respond accordingly.

iTNews Asia: Your survey numbers seem to range widely between Australia, Singapore and India on the willingness to buy from a brand working with unethical suppliers. Do cultural factors come into play when establish trust in brands?

I would say that cultural variances do not necessarily explain the difference, rather the level of awareness amongst the community for the need to consider where goods are coming for. Whether local schools, community groups and governments discuss the issue in forums or via media is important in raising awareness, which in turn would drive users to look for trusted brands. 

iTNews Asia: How mature are businesses in APAC to the issue of ethical supply chains? What are the first steps they can take do to be more responsible?

Maturity varies by county and by industry verticals. Those industries that tend to be consumer facing have ethical supply chain on top of their mind, are developing a plan and in many cases successfully implementing those plans. Outside of these mainstream consumers view, organisations are being driven to consider ethical supply chain best practices by shareholders, who through corporate social responsibility plans, want to see the companies implement on their objectives. 

First steps will always consist of reviewing current suppliers and seeking to understand what level of ethical supplier chain policies, plans they have in place. Once you have taken stock of the feedback you can then assess what changes if any you need to make in either seeking alternative supplies or asking your suppliers to adopt better ethical practices.

At the same time, you need to review your current technology stack to understand what it can do to help your organisation adapt quickly.

To reach the editorial team on your feedback, story ideas and pitches, contact them here.
© iTnews Asia
Tags:

Most Read Articles

Log In

Email:
Password:
  |  Forgot your password?