When you inevitably expand your business to cope with demand, there’s a lot more plates you need to spin. As such, you can end up expanding your reach to incorporate more external components, either through outsourcing, or working with a different supplier to cope with demand. The supply chain is a very critical component of any company. These days, as businesses need to be seen as ethical, you’ve got to vet everybody that you work with. And as demand for your product can mean you don’t have time to undertake the necessary research, you could find yourself working with unethical suppliers. But what can you do to ensure that you are working with suppliers of an ethical caliber?
Shutterstock Licensed Photo – By fizkes
Due Diligence
What you can do is incorporate specific assessment principles into the supply chain. In one respect, you could very easily do a SWOT analysis of the supply chain, exploring the specific risks and vulnerabilities, but you should also look at the area in which your suppliers operate in. If they operate in a specific sector that is vulnerable to exploitation, you need to look at the legalities of that country. You then need to decide if your company is able to live with those, seemingly lower, standards. But it’s not just about the basic legalities, you need to check your moral compass as well.
Audit
Reviewing supplier contracts gives you the opportunity to insert specific clauses and conditions. If you work in the textile industry, there are many textile testing and quality control methods available so you can ensure that what you are getting is ethical in accordance with your business values. As the contracts can be altered, it’s important to look at what sort of confirmation you get from suppliers and if they are adhering to specific regulatory obligations. This can be even harder if you have a longer supply chain. Micromanaging is one of those processes that, while not useful in an office environment, could prove handy in monitoring your suppliers.
Re-Review
What’s important to note is that things change. It’s not just the legalities, but there are conditions of environment, politics, as well as the market that can alter. When this happens, businesses have to be astutely aware of how this impacts the supplier. If they are placed under pressure for various reasons, what will the outcome be for you and them? When looking at the purchasing arrangements, you should make sure that you compare them to the going market rates. Because if they are lower, this will impact the suppliers directly, and it’s your obligation to investigate this. It’s not just about ensuring the suppliers are meeting your demands, but also, if you are able to help them. Transparency in business is essential.
And let’s remember, it’s not just about them serving you. As easy as it is to breathe down their neck, so they are complying with the conditions, you should give consideration to helping them. Sometimes it’s beyond their control that they are operating in an unethical manner. And while it is important for your business to be seen operating with ethical suppliers, if you can provide that help so they provide more compliance, you should.