Sustainable HR 1: Vendor Accountability and Problematic Supply Chains
Procurement, Supply Chain and Vendor management is changing.
It used to be that factors such as price, speed and reliability were most important in choosing vendors. That is no longer the case, especially for those with active Corporate Social Responsibility (CSR) agendas.
In the 1980s and 90s, increasing bad publicity and boycotts related to the use of sweatshop conditions and child labour by vendors in developing countries began to change the practice of some large corporations.
Issues such as traceability (knowing exactly where each resource comes from and the conditions it is produced under) and sustainability (improving environmental and social impact) also have shifted the priorities for many businesses when they choose vendors and their supply chain.
Photo: “Female Employees Working in a Sewing Room” from the Museum of Victoria, Australia
One of these major shifts is in vendor accountability and compliance. For larger businesses, this often means issuing policies and standards (and then requiring, evaluating and monitoring vendor compliance).
For smaller businesses, the time, resources and leverage to be able to require, evaluate and monitor compliance with internal policies and sustainability agendas is usually much more of an obstacle.
For those businesses for whom ethical and sustainable compliance is important throughout the entire supply chain, the solution is often more a combination of solutions. Typically this could be publicised policies and standards they expect vendors to “sign up” to as well as choosing those whose practice already aligns with their CSR requirements and agenda.
All this change and added work stems from the idea that an economic bottomline is not the only major factor in business decisions.
Importantly, it recognizes that sustainable business is most successful when it nurtures healthy employees, vendors and communities.
Finding a completely new vendor with similar rates and values as well as the training and institutional knowledge needed to work effectively together is often a long, expensive and costly process.
Given the different pressures and conditions many vendors face, the best practice with regards to this now – especially when unacceptable or problematic conditions have been discovered – is not to abruptly cancel the relationship if, after evaluation, it becomes clear that there are issues.
Issues might be related to how they recruit and retain employees or the health and safety conditions for workers. They are often on a continuum and where there are groupings of infractions, there are often more that haven’t yet been discovered.
Whether or not a company decides to work with a vendor towards improvement obviously depends on a range of factors including how serious and far the gap is from what is expected. What willingness and ability there is from the vendor to work towards compliance is also important.
When that willingness and ability are present, many are choosing to help develop and improve conditions and standards for their vendor and supply chain employees and communities. Part of this reason is a commitment to altruism and connected to upholding company values (CSR).
Tomorrow's post will continue the ideas raised initially here, specifically giving further examples and explanations for socially and ethically responsible approaches to vendor issues and supply chain management.
It used to be that factors such as price, speed and reliability were most important in choosing vendors. That is no longer the case, especially for those with active Corporate Social Responsibility (CSR) agendas.
In the 1980s and 90s, increasing bad publicity and boycotts related to the use of sweatshop conditions and child labour by vendors in developing countries began to change the practice of some large corporations.
Issues such as traceability (knowing exactly where each resource comes from and the conditions it is produced under) and sustainability (improving environmental and social impact) also have shifted the priorities for many businesses when they choose vendors and their supply chain.
Vendor Accountability
With the increasing importance of sustainable business practice to customers and key stakeholders, approaches to procurement and supply chains is changing more mainstream practice as well.One of these major shifts is in vendor accountability and compliance. For larger businesses, this often means issuing policies and standards (and then requiring, evaluating and monitoring vendor compliance).
For smaller businesses, the time, resources and leverage to be able to require, evaluate and monitor compliance with internal policies and sustainability agendas is usually much more of an obstacle.
For those businesses for whom ethical and sustainable compliance is important throughout the entire supply chain, the solution is often more a combination of solutions. Typically this could be publicised policies and standards they expect vendors to “sign up” to as well as choosing those whose practice already aligns with their CSR requirements and agenda.
All this change and added work stems from the idea that an economic bottomline is not the only major factor in business decisions.
Importantly, it recognizes that sustainable business is most successful when it nurtures healthy employees, vendors and communities.
Problematic Vendors
When a business discovers that a vendor in their supply chain is problematic for whatever reason, there is a decision to make about whether or not the relationship will continue.Finding a completely new vendor with similar rates and values as well as the training and institutional knowledge needed to work effectively together is often a long, expensive and costly process.
Given the different pressures and conditions many vendors face, the best practice with regards to this now – especially when unacceptable or problematic conditions have been discovered – is not to abruptly cancel the relationship if, after evaluation, it becomes clear that there are issues.
Issues might be related to how they recruit and retain employees or the health and safety conditions for workers. They are often on a continuum and where there are groupings of infractions, there are often more that haven’t yet been discovered.
Whether or not a company decides to work with a vendor towards improvement obviously depends on a range of factors including how serious and far the gap is from what is expected. What willingness and ability there is from the vendor to work towards compliance is also important.
When that willingness and ability are present, many are choosing to help develop and improve conditions and standards for their vendor and supply chain employees and communities. Part of this reason is a commitment to altruism and connected to upholding company values (CSR).
Tomorrow's post will continue the ideas raised initially here, specifically giving further examples and explanations for socially and ethically responsible approaches to vendor issues and supply chain management.
