Despite increasing pressures on retailers to become more transparent about how and where they source goods, ethical considerations are not top of the agenda for many managing extensive and sometimes global supply chains when compared to other sectors.
Major suppliers can play an role in pro-actively assisting retailers in realising the importance of matching ethical brand values with real efforts to reduce unfair practices within the retail supply chain. For some large retailers, the connection between actions and brand values can sometimes become disjointed as the constant need to drive down costs overtakes other considerations. Post-recession, it can be tempting for buyers to drive a harder bargain by pushing vendors too far. Some supermarkets, for example, have recently been in the spotlight for forcing dairy farmers into cutting the prices of their produce.
Supply chain management is far more than a box ticking exercise. While it facilitates cost savings and service efficiency, it also provides a baseline against which to check a retail buyer’s ethical approach to the way it deals with suppliers. The extent to which this is considered in realistic terms clearly varies, but major vendors are in an ideal position to support their customers in making sure ethical behaviour remains a priority.
In terms of the role they can play, suppliers’ ability to assist retailers is part and parcel of a robust account management system. This kind of system dictates that regular face-to-face contact and efforts to understand the day-to-day needs of retailers (as well as the rate of demand they have to respond to) should be the order of the day. A supplier might not have a comprehensive overview of how their own retail customers source goods but maintaining high levels of contact with customers provides the opportunity to find out as much as possible. Furthermore, suppliers can position their own approach to measuring operating principles within their own networks of supply.
As distance grows between supply chain partners, the need to establish a framework for measuring performance becomes more important than ever. It is therefore vital clear key performance indicators (KPIs) relating to employment terms and working conditions are established with each supplier. Vitally, a system must be put in place and externally verified where possible to consistently check these targets are being met. But even with a thorough supply management system in place complexity can still be the enemy. Therefore, where feasible, consolidate your supply chain to avoid complications and minimise the number of suppliers to a carefully chosen few, based on their ethical values as well as quality.
All of this could be second nature for a major supplier to the retail sector. But it is important to remember as a business partner, part of the service provided by large vendors should include advice and consultation on best practice and how their customers could apply the same thinking.
☛ Nigel Crunden is a business specialist at Office Depot