Ethical sourcing, which is typically implemented in the form of a set of procurement guidelines, is part of a company`s operational standards. It is a concept applicable to all companies dealing with a supply chain, regardless of the country in which they are based. There are obvious barriers to progress, although procurement plays an important role in how much CSR companies can claim throughout the supply chain. Implementing an ethical sourcing program can be a daunting undertaking for any business, but if done right, the results will translate into massive profits for the entire organization. Large organizations are already leading the way. In 2017, 85% of Fortune 500 companies published sustainability reports, up from just 20% in 2011. Many countries have introduced their own ethical sourcing laws, including the EU as a whole, the UK, Australia, France, Germany, India, Italy, the Netherlands, Norway, Switzerland and California in the US. An effective supplier management tool can help companies achieve their ethical sourcing goals. This is where Delta eSourcing can help. It helps companies maximize the value of supplier interactions.
CIPS recommends that the procuring organization go beyond officially scheduled site visits to the clipboard by informing key suppliers that your organization has the right to audit its activities (physically or remotely) without notice. They have a whole ethical purchasing team that visits suppliers directly to find ingredients, meet with producers and ensure that workers are working fairly and that the environment is protected. To show their commitment, they have a section of their website dedicated to their ethical purchasing practices, full of case studies and videos. Considering that the company generated sales of around $900 million in 2016, a 26% increase over 2015, it`s safe to say that consumers care about ethical sourcing, at least in the cosmetics industry. This is a trend that many brands are leaning towards, and for good reason. Even if a company maintains good practices itself, it is entirely possible that its supply chain involves an organization that applies unethical labor practices. These questions are just as relevant to UK-only supply chains as they are to those that operate internationally – for example, the government estimates that around 13,000 people work in slavery-like conditions in the UK. Ethical sourcing can help buyers avoid these pitfalls, as it focuses on conducting sourcing activities to the highest possible standards of responsible, sustainable, environmentally friendly and socially responsible business practices. The actions of potential suppliers are not static and can become more or less ethical over time. It`s important to continuously audit the suppliers you have and make sure they don`t fall below your ethical criteria to advance your overall sustainable sourcing project.
When it comes to sourcing new products or services, it`s important for your team to apply a proactive and dynamic review and audit of suppliers (including the supply chain). «We know this is a growing area of opportunity for companies throughout the supply chain, but there is limited data that encourages consumers to pay more at checkout,» Polski said. «This forces companies to think creatively about economic incentives for sustainability programs, which include supply chain and operational efficiency.» This document can express the standards you want to meet throughout your supply chain. You can set expectations for the ethical, social, environmental, safety, labor, and health standards you expect from all the suppliers you work with. Once you`ve collected this data, you can use the results to identify ethical issues at each site and use this information to create a corrective action plan that helps your suppliers improve worker conditions. By 2020, the B2B e-commerce market is expected to be worth $6.7 trillion, led by Alibaba and China. One of the ways you can take advantage of this business market is to direct some of your business spending toward social causes, thus focusing on CSR and ethical sourcing in your day-to-day sourcing efforts. Controversies about ethical sourcing are often seen by the public, so a company that practices it is often promoted by public support. Therefore, for a smart procurement manager, sustainable sourcing is a smart choice when looking for a specific supplier or supplier, not only for you, but also for the benefit of the company. Also, no one wants to buy anything from a company that supplies illegal goods, right? Careful planning and data collection must be used to find the right sources of supply.
Avoid suppliers who have a reputation for sourcing their supplies in a questionable or unethical manner. My colleague Chris Cunnane reviewed an OpenText survey on this topic. The survey itself was much broader in scope than this simple question. OpenText surveyed more than 25,000 consumers in 12 countries to study consumer behavior and buying behavior, and how the Covid pandemic has changed consumer attitudes. While the survey included questions about product research, personalization, and overall customer experience management, my colleague was more interested in supply chain spin. Namely, what do consumers think about ethical sourcing and how does it affect their expectations for product delivery? Since procurement exercises can involve complex relationships between many different organizations, it is possible that many unethical practices are involved somewhere in the supply chain. These can range from illegal activities such as modern slavery and corruption to broader issues such as ignorance of the consequences of climate change. By continuously improving our business practices, we can make positive changes that not only make consumers happy, but also facilitate supply chain management.
So yes, consumers really care about ethical sourcing. But do companies do it? Some do, some don`t. And those who do tend to do better in the eyes of the consumer. which affects their results. If you`re not a company that deals with ethical sourcing, you should be. A perfect example of sustainable sourcing is the development of synthetic ivory. Companies that want to avoid getting involved in banning ivory trade buy and use synthetic ivory to discourage poachers and hunters from hunting elephants, seals and walruses in the wild for their ivory tusks. Ethical sourcing is a responsible approach to managing the supply chain, sourcing products and raw materials from companies that adhere to certain sustainable practices and regulatory requirements. Estée Lauder strives to source high-quality ingredients and materials from around the world.