Transparency + Engaged Suppliers = Sustainable Sources of Raw Materials

Contribution by Stuart Rosenberg – Senior manager

It was not too long ago when we read about Findus, the frozen food brand and the horsemeat scandal – their beef lasagna was found to have horsemeat. In response to these charges Findus has joined and enlisted the assistance of the Supplier Ethical Data Exchange (Sedex).

With their support Findus will conduct ethical, health and safety tests of Findus’s supplier. With this information they hope to manage risks throughout their supply chain. The plan is to engage suppliers to create more transparency across the global supply network. Of course, the plan includes re-gaining the public trust.

This lack of visibility or transparency and weight over suppliers can and does lead to issues such as:

[list][item icon=”fa-flag” ]Work can be sub-contracted to suppliers with poor health and safety standards[/item][/list]
[list][item icon=”fa-flag” ]Dismal labor practices[/item][/list]
[list][item icon=”fa-flag” ]Detrimental environment al practices[/item][/list]

[blockquote style=”1″]Labels belonging to Indites, Wal-Mart and Sears were found in the ashes of the latest factory fires in Bangladesh, where more than 100 workers died in factories with inexcusable safety issues..[/blockquote]

[blockquote style=”1″]Yun Foods, owner of KFC, saw a scandal from its Asian supplier who trashed a rainforest to source paper for KFC buckets.[/blockquote]

These are just two of the many instances of ignoring health, environment and safety issues. What can manufacturers and retailers accomplish to avert these scandals? What are the challenges inherent in such a global task? Where do they start the journey?

Climate change, more extreme weather, ill thought out farming practices, water scarcity and population growth all make their mark on the global supply chains. The result is higher raw material costs, scarcity of those raw materials, resulting in a threat to retailers’ and manufacturers’ operations. Thus, analyzing the risks is almost always a mounting struggle. Companies become inundated with ‘Big Data’ and suppliers are hesitant to complete check list and or undergo audits.

In the words of Sedex CEO Carmel Giblin: “Manufacturers and retailers need clarity of purpose”. These types of companies – mostly food and clothing – need to establish procedures which put into motion clear, concise and realistic expectations for high risk areas. Having the use of ‘Big Data’ is one thing, using it wisely is another? Must understand their suppliers’ business challenges, review suppliers’ supply chain issues as a team and relate how sustainability is linked to the health of both businesses.

Companies should collaborate in working groups and joint projects such as the Ethical Trading Initiative.

Tackling industry wide issues as one entity can accelerate change in a cost effective manner. Cross collaborative groups have become ever more popular. These collaborative groups can empower suppliers who have direct relationships with other suppliers further down the supply chain.

Retailers and manufacturers who collaborate with local suppliers can be influential in communicating effectively with regional suppliers. The result of this collaboration and communication can’t be underestimated.