Being linked to any form of immoral practice can be detrimental for a brand’s reputation.
Disasters such as the Rana Plaza factory collapse in Bangladesh in 2013 have put the spotlight on supply chains and whether or not companies really have control over them.
Businesses often have multi-tiered supply chains from which they source the numerous components required to make their products. Due to this complexity, it can be difficult to keep track of what’s going on at every point throughout the network.
Although organisations continue to reinforce their commitment to maintaining ethical supply chains, global issues such as modern-day slavery remain.
So where is the system breaking down?
Currently, retailers will know the detail of their primary suppliers and often have approved suppliers in their secondary tiers for each component. In general they rely on a combination of place-in-time audits, codes of conduct, contractual terms and ultimately, honesty, when asking about their practices.
An obvious flaw with this is the fact that these processes don’t take into account the real-time view of where and when transactions take place.
What often happens is that manufacturers will use alternative suppliers who may offer goods at attractive lower prices, but operate factories with extremely poor conditions. In these instances, there is no guarantee that the defined standards are being adhered to.
Although these approaches are useful and may help to reinforce a company’s ethical stance, their effectiveness can be problematic as they do not provide any visibility of actual activity.
What happens when the inspection is over or the signed agreement is ignored? The fallout from that may well be removing the supplier from the chain. But the reputational and even legal damage that could arise is unavoidable and far-reaching.
It is clear an alternative approach is needed in order for companies to achieve greater oversight. To accomplish this, some retailers are turning to the latest technology, such as the cloud-based platforms.
The technology allows customers to take the steps necessary to reach full compliance. Companies can start by simply mapping their nominated supply network, and subsequently gain the ability to trace the journey of every individual order, product and component within it in real-time.
In doing so, customers can ensure that complete visibility and full accountability is achieved across an entire supply chain.
This greater oversight ensures any internal compliance standards can be met, as well as increasing efficiency, which delivers better financial performance at the same time as reducing risk. In addition, it will also ensure that external legislative requirements are met such as those outlined under the Modern Slavery Act 2015.
So although audits, codes of conduct and contractual terms might seem
adequate, it is only when they are used in conjunction with intelligent software solutions that it is possible for businesses to reach a wholly transparent result that avoids unethical, non-compliant and uncompetitive secondary and tertiary suppliers.