Today’s Guest Post today comes from 2 researchers in the SCM field, Andreas Wieland (left) at Berlin Technical U. and Robert Handfield at N. Carolina State U.
Two recent disasters in the garment industry, the Tazreen Fashions fire and the Rana Plaza building collapse, have caused outrage over the lack of social responsibility across global supply chains. As we discuss in our new article in Supply Chain Management Review, “The Socially Responsible Supply Chain: An Imperative for Global Corporations,” integrating social responsibility into a supply chain strategy is not easy. Because of the emphasis on cost efficiency and supply assurance as the basis for supply chain strategy, other targets like focusing on social aspects have often been ignored. This is made even more challenging by the fact that customers are often unwilling to pay more for socially responsible products. Using this rubric, sourcing from regions with the lowest possible labor costs has been the most important criterion for Western retailers when selecting suppliers. Social responsibility not only competes with cost efficiency, but also with other targets such as customer requirements and flexibility.
There are three core principles that are essential for ensuring socially responsible business practices and successfully managing the extended global supply chain. First, a program to audit both products and suppliers (beyond tier-1 suppliers) needs to be implemented. Second, visibility (perhaps using smart technologies) is important for those categories of supply that cannot be directly controlled. Finally, collaboration is needed to successfully managing a socially responsible supply chain; this includes collaboration across the industry–and with local partners.
An excellent example of these principles in action is an approach adopted by the Swiss clothing manufacturer, Switcher. Each garment bears its individual Respect Code, a number sewn into each product, along with the Code’s web address. This code can be used by the customer to find online information about the product’s supply chain, including social and ecological information of each plant. Using the code, consumers may learn that production of a certain jacket took place in Portugal, that the plant is ISO 14001 certified, and that the CO2 footprint is 7.6 kg. Consumers can also see when the plant was last audited.
It is time to become serious about socially responsible supply chain management.