Supply Chain Management and Corporate Social Responsibility
Two recent disasters in the garment industry, the Tazreen Fashions fire (2012) and the Rana Plaza building collapse (2013), have caused outrage over the lack of social responsibility across global supply chains. In our new article, The Socially Responsible Supply Chain: An Imperative for Global Corporations, Robert Handfield and I discuss three core principles that are essential for ensuring socially responsible business practices and successfully managing the extended global supply chain: First, a program to audit both products and suppliers needs to be implemented; this program must go beyond direct relationships with tier-one suppliers. Second, visibility is important for those categories of supply that cannot be directly controlled; hereby, electronic and smart technologies promise new opportunities. Finally, collaboration is needed to successfully managing a socially responsible supply chain; this includes collaboration across the industry, with local partners, and with universities. It is time to become serious about socially responsible supply chain management.
Wieland, A., & Handfield, R.B. (2013). The Socially Responsible Supply Chain: An Imperative for Global Corporations. Supply Chain Management Review, 17 (5), 22-29
Responsible Sourcing Insights
Sedex is a nonprofit organization dedicated “to driving improvements in ethical and responsible business practices in global supply chains”. Their new six-part “Responsible Sourcing Insights Films” series tackles key challenges in responsible supply chain management.
Horsemeat Supply Chains
Food supply chains are affected by supply chain trends such as globalization, consolidation, and commoditization. Supply chain managers have eagerly sought to apply textbook knowledge to these supply chains. Consequently, companies have concentrated on core competencies like processing or marketing to meet customer requirements. However, the horsemeat scandal is just another example to reveal that food supply chains got out of control. The more complex supply chain systems become, the less controllable they seem to be. Based on a series of incidents in food supply chains, Roth and her co-authors (2008) have developed a conceptual framework for quality management in food supply chains. The framework contains six Ts, which are identified as critical factors associated with food (or more generally: product) quality: (1) traceability, (2) transparency, (3) testability, (4) time, (5) trust, and (6) training. I believe that this framework can help improving food supply chains, but customers should also stop focusing solely on food price rather than food quality.
Roth, A., Tsay, A., Pullman, M., & Gray, J. (2008). Unraveling the food supply chain: Strategic insights from China and the 2007 recalls The Journal of Supply Chain Management, 44 (1), 22-39 DOI: 10.1111/j.1745-493X.2008.00043.x
Creating Added Value beyond Corporate Boundaries
Some months ago, Symrise, a global supplier of fragrances, flavors, active ingredients, and aroma chemicals, has won the German Sustainability Award 2012 in the “Germany’s Most Sustainable Initiatives” category for its approach to procure vanilla in Madagascar: Symrise closely collaborates with more than 1,000 vanilla farmers and “the entire procurement process takes place locally, from cultivation and harvesting, to the fermentation of the beans, all the way through to extraction”. The company partners with NGOs, development organizations, and farmers’ associations to ensure “that its projects in the areas of environmental protection, income diversification, nutrition, health and education continue to blossom over the long term”. Symrise benefits from these activities by receiving reliable access to top-quality raw materials. This initiative demonstrates how social responsibility, environmental protection, and business success can go hand in hand. It is also an example of good supply chain management, as added value is created beyond corporate boundaries.
Bangladesh Clothes Factory Fire
At the end of last month, a garment factory fire in Bangladesh killed more than 100 people and injured many more. Let us view this tragedy from a supply chain perspective. Supply chains are typically customer-focused. The incident suggests that customers expect cheap prices, but are not willing to pay for social standards. The lowest possible labor costs seem to be the single criterion for Western retailers when selecting suppliers. In Bangladesh, mostly women and often children are exposed to risks from lacking fire safety standards in factories. Who is to blame? Brands whose marketing experts create new consumer needs? Consumers who do not know a product’s supply chain? Retailers who are forced to select the cheapest suppliers to survive competition? Suppliers who do not invest in fire safety? Human rights groups urge Western governments to press retailers and apparel brands to join the Bangladesh Fire and Building Safety Agreement.
