Saturday, November 24, 2012

What I Learned About Supply Chain Sourcing

As I noted in earlier blog posts, I attended the BSR Conference in October. My primary intent was to determine what organizations are doing to improve labor conditions in their supply chains. I was, to say the least, inspired by the progress. Thanks in large part to the UN Guiding Principles on Business and Human Rights (the GPs), developed by Special Representative John Ruggie, many organizations are looking beyond improving labor rights to protecting and respecting human rights for a larger contingent of stakeholders directly impacted by domestic and international operations.

If you pay attention to international news, as I do (you may notice from my twitter feed), you cannot escape the all-too-frequent reports about hazardous conditions and tragic accidents in factories, fields, and mines around the world. A significant portion of the goods produced end up in the U.S. or other "developed" nations. I find, when discussing supply chain sourcing or international labor rights with people unfamiliar with the sustainability movement, several questions come up, including:
  • How can we, as consumers, ensure our purchases do not support these activities? 
  • What power do western-based corporations realistically have over the working conditions overseas? (without a doubt, we have our own domestic labor issues but my focus is on international development)
  • Is it within our rights or responsibilities to interfere in activities taking place in other sovereign nations? 
  • Should a capitalist society concern itself with these issues, which distract from the profit motive frequently thought to be the primary purpose of business?

I can't promise to answer these questions to the satisfaction of every person, but I have put together some blog posts to summarize corporate responsibility and sustainability initiatives in an effort to show what is currently being done and the direction we are headed.

Supplier Codes of Conduct

Over the past 20 years, corporations have been developing and implementing supplier codes of conduct (here’s an example currently in use by my former employer, The Walt Disney Company), an agreement with direct suppliers requiring adherence to a minimum level of labor standards, usually based on the ILO Core Labor Conventions. If a supplier is unable to meet these minimum standards, the organization can direct remediation or, if unsuccessful or resisted, terminate the business relationship. Although these codes clearly represent a positive development toward recognizing and protecting labor rights, they have inherent weaknesses, including:
  • realistically, corporations are incapable of auditing all their supplier factories, let alone ensuring conditions are consistent year-round,
  • implementation and enforcement are often limited by local laws and regulations,
  • agreements typically reach only one level down the supply chain, meaning they don’t have any real impact on raw material sourcing, and
  • unless the corporations produce detailed Social Responsibility reports, it is difficult for consumers to ascertain or evaluate how effective the agreements are or use that information to influence their purchasing decisions.
I’m not suggesting companies abandon their supplier codes of conduct, but it is useful to understand the limitations in a practical sense.

With the above in mind, I have put together posts summarizing information I gathered related to the following:
I hope these are helpful or, at least, interesting. As always, if you have any questions or comments, please let me know.

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