Management of the supply chain is not just ensuring smooth operation and transportation of goods from one site to another. It also entails inventory control, enterprise mobile solutions and barcode data collection from stock items purchased by consumers. An article in Supply Chain Brain detailed a ChainLink Research report that said at the heart of supply chain management are ethical issues that must be addressed.
Is the Trend Toward Ethical Behavior Altruistic or Profit Driven?
ChainLink research's Ann Grackin explored on video whether companies are being driven by profit or a sense of common good when they explore and change how they conduct supply chain operations. She explained that most companies don't set out to be unethical in their practices, but trying to gain market advantage can cause managers and businesses to overlook how products are being made or parts supplied and workers treated. Grackin urged companies to be vigilant in how they oversee their supply chain operations and rectify any problems they find right away. Grackin said the business trend toward upgrading ethical behavior is one of good intentions driven by the realization that consumers are more aware of how products are made and more willing to purchase products that are ethically made.
Product Origin Understanding Is Key to Managing an Ethical Supply Chain
Knowing the origin of a product is great business practice with many benefits but few companies actually pay attention to this aspect of the supply chain. Complex value chains are comprised of thousands of suppliers, and generally there's no one from the manufacturer in charge of traceability. This oversight can cost large sums of money in multiple areas but is easy to fix by mapping the company value chains, said Tim Wilson in a story for The Guardian.
Business Is Good for Companies with Ethical Operations
For hundreds of years, product origin information has been known to increase value. The provenance in fine arts objects or food products from protected origins like Gorgonzola or Asiago cheeses, or 100 percent Florida Orange Juice are just a few examples of knowledge of origin increasing value. If a company can't identify product origins, there's a good chance, said Wilson, that consumers will abandon them for businesses that do know where their product ingredients come from. For example, Wilson added, the worldwide market for food traceability is projected to increase by 8.7 percent and be worth to $14.1 billion by 2020.
Maintaining Ethical Standards Can Minimize Costs
Availability of materials affects market price, and traceable goods are usually more expensive because they are rarer. Wilson said if traceability was the norm in business, cost discrepancies wouldn't be an issue. Because that isn't the case, he noted, savings can be found by those who look. Knowing and understanding the value chain can help to maximize the way materials flow through the system and reduce cost. Knowing input materials fluctuations upstream in the chain can help get better production rates, reducing any rework costs which can impact the bottom line heavily.
Unethical Behavior in the Supply Chain Could Kill a Successful Business
What goes on upstream in the supply chain could bring feast or famine to a business. Nike's sweat shop labor problems and Mattel's lead paint issues are just two examples of how upstream issues can impact branding and imaging and affect sales of product, explained Wilson. Legislation is pending or being proposed in many nations to protect workers and mandate the safe use of natural and living resources. Ann Grackin told Supply Chain Brain that ethical behavior bodes well for business operations. Mistreated workers often turn to theft and destruction, and that should be warning to business operations.
"The less time a corporation spends taking care of those employees, the more likely they are to have those kinds of problems," she said.