Supply Chains
The importance of stable, ethical, and sustainable supply chains.
A supply chain is a network of individual companies which work to take raw materials - converting them into finalised commercial products. They are an integral part of all industries and can be made up of many different organisations. This includes material processors, manufacturers, producers, vendors, warehouses, transportation, distribution centres, and retailers. Supply chain partners are key stakeholders in an organisation, and they work to ensure smooth business operations. Supply chain management is often broken down into 5 key parts being; planning, sourcing, manufacturing, delivering, and returning.
What constitutes ethical and sustainable supply chains?
With growing expectations around businesses ESG standards, creating ethical supply chains has become a key area of discussion. Securing an ethical supply chain means to ensure anti-bribery and corruption policies, fair working conditions - including the sourcing of materials – and fair pay across an organisations entire operation are in place. Additionally, organisations are becoming particularly concerned with the sustainability of their supply chain, as most companies carbon emissions fall within scope 3. Supply chain partners are now being expected to have environment awareness through sourcing low impact materials and embracing a circular economy business model to reduce waste.
What are the benefits of ethical and sustainable supply chains?
Organisational success often rides on the strength of their supply chain, including its stability and future prospects. With the global rise in attention on ethical and sustainable practices, it is also important to consider how applying this to supply chain standards can benefit organisations. Increased awareness and expectations of ethical and sustainable actions throughout supply chains have strengthened ESG investments and can create a developed organisational portfolio. Upholding strong ESG values and offering transparent information, detailing each aspect of their supply chain, can also help an organisations reputation to grow client and consumer loyalty. Taking accountability for ethical and sustainability standards has become a key focus for young talent and investment groups and so reflecting these values within an organisations supply chain can help increase talent acquisition, retention, and productivity. It is also important to note that through becoming a leader in this transitional time period, organisations can mitigate future risks including governmental regulations and further stakeholder expectations.
How is the U.K government guiding responsible supply chain management?
Late last year, the U.K government’s Department for International Trade (DIT) published a guidance framework to create resilient supply chains. With this, they identified 5 key areas for businesses to consider when trying to decrease dependency on their supply chain.
1. Diversification: identify multiple ways to source materials and products to enable flexibility.
2. International Partnerships: collaborate with international partners, working to understand common challenges and solutions.
3. Stockpiling and Surge Capacity: consider the potential benefits of holding stocks and identify if surge capacity could be included in contracts.
4. Onshoring: examine if increasing or expanding domestic capacity could reduce risk.
5. Demand Management: review the benefits of managing demand, offering substitutes and alternatives, and work to incorporate innovative, circular methods of operation.
Understanding the governmental guideline can help to create stable supply chains, which is an essential baseline for integrating more ethical and sustainable standards without adding great risks to current business operations.
Ultimately, embedding more ethical and sustainable practices is becoming necessary as awareness and therefore expectations are increasing. The process of transitioning to an entirely ethical and sustainable supply chain does not come without challenges. However, there are many rewarding aspects of embracing these ESG values which can result in a stronger organisation overall.