Whether it's the result of legislation, intense media scrutiny or increasingly demanding consumers - or a combination of all three - companies around the world are now recognising the importance of responsible supply chain management.
However, the challenges they must overcome to achieve it are greater than ever. The sheer size and complexity of global supply chains is enough to keep the most talented logistics professionals occupied, but a range of additional factors are now putting their supply relationships under phenomenal pressure.
Climate change, the increased frequency of extreme weather, water scarcity, population growth. All these issues are having an effect on supply chains, pushing up the cost of raw materials, leading to unpredictable behaviour among suppliers and introducing a fragility that can be disastrous when unforeseen circumstances arise.
Companies with global sourcing operations are tasked with mitigating the potential impact of these profound environmental and social trends, while also maintaining the ethical integrity of their supply chains. It's certainly not a job for the easily intimidated.
Transparency and Risk
Of course, businesses will never completely eradicate risk from their supply chains. As we've already established, they're too large, too geographically diverse and the number of other variables is too great. This is why supply train transparency has emerged as a critical issue for businesses in recent years. A company must know exactly what is going on, at each tier of its supply network, in order to successfully track and minimise these risks.
The tragedy of the Rana Plaza garment factory collapse, which claimed the lives of 1,129 people in Bangladesh earlier this year, provided clothing firms with a sombre reminder of what can happen when supply chain risks aren't addressed.
However, it isn't just the fashion industry that has been found wanting in this regard. The horse meat scandal, which spread alarmingly across Europe in January, has now caused untold financial and reputational damage to many frozen food suppliers.
Production Tracking Systems
For all businesses managing complex supply chains on a day-to-day basis, technology represents an opportunity to change things for the better. Many firms would have once paid large sums for third parties to provide supply chain consultancy, but now have the tools to effect change themselves. More specifically, they have access to software that can enable supply chain transparency, which in turn allows them to identify key risk areas and root out any unethical partners.
This is evident in the supply chain software Segura has developed for apparel retailers. Our production tracking systems are designed to ensure transparency by allowing users to monitor the production of all trims required for a single garment - labels, swing tickets, hangers and packaging.
Our users can create a diverse pool of approved suppliers in the system, and then invite them to bid for work. This means unapproved suppliers cannot enter the process at any point, and users have complete visibility at all times. They know who is doing the work, where it is being carried out and when it is due to arrive.
Suppliers can only subcontract using the system, which means they too can only choose companies on the approved database. If an order is placed but fulfilled without using the system, it is impossible to delete the original order request.
This means that when users receive items and the order was not handled via Segura, they know immediately and can follow up to check items were not unethically sourced. The risk is clearly identified from the outset and companies can take steps to ensure the ethical integrity of their supply chain has not been compromised.
An Ongoing Process
Eradicating the unethical treatment of garment workers in countries like Bangladesh, the world's second largest clothing exporter, is a complex operation that will require sustained cooperation from governments, retailers and other international organisations.
An increase in the minimum wage and projects like the £15 million initiative announced last week by the Bangladeshi authorities and the International Labour Organisation represent clear progress, but there can be no doubt this process has a long way to go.
As well as encouraging such initiatives, retailers have an opportunity to take control of their own sourcing and support ethical suppliers by making supply chain transparency a priority. With our production tracking system, they can also mitigate risks, address problems as they arise and ultimately achieve better quality without higher costs.
Originally published 02/11/2013