Effective supply chain management saves businesses time and money and, increasingly, means addressing your company’s ethics as well as the ethical conduct of your supply chain partners.
How are ethics and supply chain management related? Read on to find out…
The importance of good supply chain management
Successful businesses understand the importance of practicing good supply chain management.
They know their supply chain partners and work closely with them, analysing data on their collective operations and co-ordinating action to deliver improvements on every level.
All this planning and effort comes together to deliver a seamless, professional service for the end consumer, delivering maximum customer and client satisfaction.
Ethical supply chain management is good supply chain management
Increasingly, good supply chain management means building an ethical supply chain.
Decades of commodity production and trade without thought to the consequences has contributed to climate crisis, biodiversity loss, forced labour, low wages and inequality – and businesses are being called on to help redress the balance.
But it is no longer enough for organisations to look inward, limiting their sustainability drives to their own four walls, and ignoring the actions of those with whom they do business.
A 2020 survey by McKinsey found 66% of people consider sustainability including when making a purchase. Today’s consumers are too savvy to be fooled by companies’ vague claims of being ‘green’ or environmentally friendly, or by empty promises. They want to see them taking meaningful action to minimise the impact of their operations on people and planet.
What is an ethical supply chain?
An ethical supply chain is one in which practices meet ethical standards at every level, from harvest of raw material to a product’s sale to the end user.
There are important factors to the building and managing of an ethical supply chain. These are:
Sustainable sourcing – Raw materials cause little or no harm to the environment, the workers that harvest them, and the productivity of the region they come from
Safe sources – Free from contamination or adulteration
Ethical labour – Good conditions and appropriate pay for workers throughout the supply chain, including those growing and harvesting ingredients and raw materials.
The benefits of an ethical supply chain
For reasons we’ve already mentioned, ethical supply chains are no longer a ‘nice-to-have’ – they are an imperative for building stable, efficient and profitable supply chains.
Businesses that successfully manage transparent, ethical supply chains benefit from:
Greater quality control – transparency in the supply chain minimises the risk of quality control issues and better equips businesses to act in a way that minimises injury, damage and liability
Enhanced efficiency – increased data and transparency across the supply chain allows managers on the ground to make informed real-time decisions that reduce delays and could save money
Easier implementation of circular business practices – having all the relevant information available on raw materials sources, manufacturing processes and logistics operations means organisations can start to make sustainability improvements aimed at closing loops in the supply chain. Find out more about circular design.
Improved brand perception, likely leading to increased sales
Avoiding expensive fines and product recalls where goods are found to breach safety and ethical standards.
Building ethical supply chains
This is a task that is neither cheap nor easy and requires an organisation to be wholeheartedly committed to making continuous incremental progress towards ambitious stretch targets.
It is a cliché, but every little really does help. Maximising the use of space in your warehouse, increasing truck loading efficiency, switching to sustainable packaging – it all makes a difference.
The role of sustainable packaging in good and ethical supply chain management
Let’s take packaging as an example…
(Disclaimer: we manufacture sustainable packaging, so we’ve a vested interest in the topic!)
Product packaging is much more than just a simple cardboard box or shipping crate in which your product is dispatched. Today, the term ‘packaging’ encompasses the entire – often complex – systems that enable goods to move through a global supply chain. It is not just about product protection and brand identity, packaging plays a central role in the entire supply chain management system.
Well-designed, safe and cost-effective sustainable packaging not only improves an organisation’s sustainability credentials, but can dramatically reduce costs throughout the supply chain, and potentially become a USP in some markets.
Find out more: Read our guide to sustainable packaging.
Optimising product packaging for effective supply chain management requires considering the following:
How the product is produced, and the best packaging for its safe transport
The logistics of how products move from one part of the supply chain to another
The different environments that product must pass through
How the product is to be marketed on distribution
Small changes like investing in bespoke product packaging to reduce material use and improve space efficiency in transit, light-weighting, and eliminating unnecessary secondary packaging materials and void fill can make a huge difference when that change is mapped across the supply chain for that product.
Bigger changes might involve redesigning product packaging to have a dual purpose and to encourage re-use elsewhere in the supply chain.