Your SlideShare is downloading. ×
Responsible supplier management (part of the green supply chain series)
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Responsible supplier management (part of the green supply chain series)

704
views

Published on

Learning objectives: …

Learning objectives:
- Introduce the basic options for responsible supplier management
- Introduce voluntary codes and social labels and list major examples
- Summarise the successes and failures of voluntary codes and social labels in impacting labour relations
- Highlight the dysfunctions and flaws of factory auditing for compliance standards, and the insurmountable challenges faced by factories in obtaining compliance
- Demonstrate strong case to shift from seeking compliance to going beyond compliance: capacity building and long-term partnership

Published in: Business, Technology

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
704
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
16
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. RESPONSIBLE SUPPLIER MANAGEMENT (PART OF THE GREEN SUPPLY CHAIN SERIES)Thursday, 30 1 OF 26August 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 2. › Introduce the basic options for responsible supplier management› Introduce voluntary codes and social labels and list major examples› Summarise the successes and failures of voluntary codes and social labels in impacting labour relations› Highlight the dysfunctions and flaws of factory auditing for compliance standards, and the insurmountable challenges faced by factories in obtaining compliance› Demonstrate strong case to shift from seeking compliance to going beyond compliance: capacity building and long-term partnershipLEARNING OBJECTIVESThursday, 30 INTRODUCTION 2 OF 26August 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 3. Remember the infamous Nike case?Media: Slammed Nike: CEO announcesthe labour Media: Leaks more sweeping reformsconditions of information, (wages not one ofNike’s contracted creates more them), financialfactories scandal performance returnsLate 80s / Mid 90s 2000sEarly 90sNike: Argued it Nike: Joins Apparel Media: Recogniseswas not Industry Nike’s efforts,responsible for its Partnership, audits criticism fades awaycontractors’ factories, majoractions financial losses Thursday, 30 INTRODUCTION 3 OF 26 August 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 4. This presentation is about managing your company’s suppliers for CSR Extended …Producer Industrial Resp. Ecology (EPR) Life Cycle (IE) Assessment Green (LCA) Purchasing Supplier managementBusiness as usual Thursday, 30 INTRODUCTION 4 OF 26 August 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 5. Organisations have a lot of trouble monitoring their suppliers # factories e.g. It took C&A 4 years to identify all their factories! Not Monitoring monitoring suppliers’ compliance compliance # suppliers e.g. Wal-Mart Compliance fraud have over 30,000 e.g. fake time THERE’S MORE suppliers! sheets, etc.Thursday, 30 INTRODUCTION 5 OF 26August 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 6. Ensuring compliance can be done by a company individuallyMonitoring and auditing to Describing what is not permitted – accepting Negative listing suppliers who do not do anything especially bad ensure compliance Describing what is required – accepting suppliers Positive listing who meet all the criteria and standards Meeting a positive list puts you into a list of Company screening preferred suppliers, which are chosen from Suppliers submit information about their Information provision environmental and social performance Thursday, 30 INTRODUCTION 6 OF 26 August 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 7. Or as an industry-wide approach called a “Voluntary Code”› For example: Social Accountability International’s SA8000 Control of Suppliers and Subcontractors › i.e. their requirements for supply chain management1. Have procedures for evaluation and selection2. Keep records of their commitments to meet standards3. Keep evidence that they are meeting the standards4. Ensure similar protection and work conditions as your direct employees Thursday, 30 VOLUNTARY 7 OF 26 August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 8. For a voluntary code to be successful, it needs 3 things1. Firm vulnerability › If the company’s brand and media attention are important to the company, the firm is vulnerable and voluntary codes are more likely to be successful2. Structure of production › The more complex the production process and supply chain, the harder it is to control and manage and therefore less likely a code will be successful3. Pattern of compliance and monitoring › If the visits are unpredictable and the issues being monitored are tangible, then voluntary codes are more likely to have success Thursday, 30 VOLUNTARY 8 OF 26 August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 9. There are numerous voluntary codes, multiple codes on each topicCode Developed Impact Notes:Social 1996 By 2004, 4,430 SA8000 audits conducted everyAccountability facilities in 40 six monthsInternational countries over Based on ILO and UN rights(SAI) 43 sectors declarationsFair Labour 1996 By 2003, 10 Came from Apparel IndustryAssociation corporations Partnership(FLA) and 170 Audit results put online universities Industry dominatedWorkers Rights 1999 Reaction to FLAConsortium Student-run Just for universities Thursday, 30 VOLUNTARY 9 OF 26 August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 10. Every commodity, issue, region, industry has multiple codes!Code Notes:Ethical Trading Identifies and disseminates information on how to improveInitiative labour conditions Membership based organisation with criteriaClean Clothes Lobbies retailers to use their purchasing power to influenceCampaign manufacturers, and helps them lobby their manufacturersCommon Code Agreement to stop using child labour, to pay a minimumfor the Coffee wage, permit the formation of unions and to meet certainCommunity social and environmental safety standardsCocoa Industry Global standards in the cocoa industry aimed at eliminatingProtocol child labour and slavery Thursday, 30 VOLUNTARY 10 OF 26 August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 11. Success is relative: only aspects of labour relations have improved Factories and manufacturing What’s not improving industries Age restrictions (child labour) Health and safety (working Compensation rates conditions) Overtime Agricultural industry Child labour in bangles and carpet What’s improving industries Formation of trade unionsThursday, 30 VOLUNTARY 11 OF 26August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 12. “Social labelling” is another industry approachLabel Industry Issue ProcessRugmark Carpets Child labour Companies pay for a certification mark, money which is used to pay for inspections and children educationFair Trade Coffee Fair pricing of A purchase must come from a first, then goods, better cooperative with a guaranteed bananas, environmental price floor toys, tea, practices flowers, cocoa, etc. Thursday, 30 VOLUNTARY 12 OF 26 August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 13. The same can be said for the success of social labels Encourages consumers to pay a Areas of improvement premium for CSR Very popular and well known Exposed how grossly underpaid Modest sales (recently represented the producers were only 0.4% of global coffee purchases) Struggles to compete on taste Does not address the root cause of Strengths the issue: oversupplyThursday, 30 VOLUNTARY 13 OF 26August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 14. Tremendous challenges stand in theway in their ability to make an impact› Is the information provided by the suppliers reliable and truthful?› How will organisations acquire sufficient accurate information on the environmental and social conditions of the supplier?› Some industries are under scrutiny whereas others are not (e.g. apparel is, agriculture is not)› Auditing has many drawbacks› It is hard to control all suppliers› The costs of compliance are rapidly increasing, and are getting excessive› Codes of conduct monitoring are marked by inconsistency, duplication and inefficiency› The long-term sustainability of such a strategy is highly questionable Thursday, 30 VOLUNTARY 14 OF 26 August 2012 CODES Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 15. Auditing, the most popular way of monitoring compliance, is flawed› Audits rely on information from management, not the workers › More prone to missing violations› Audits are a low-margin business, conducted poorly by untrained staff Thursday, 30 COMPLIANCE 15 OF 26 August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman. Image from made-in-china.com
  • 16. In fact, auditors expect factories to be cheating their complianceThe role of the auditor is not to find if the factory is compliant… it’s to find how they’ve gotten away with cheating for more than a decade! They are complicit in deception! Thursday, 30 COMPLIANCE 16 OF 26 August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 17. Why? Faking compliance is the best (read: only) way to go for a factory Cheating is systematic, and many of their customers (the multinationals!) know it› There are so many voluntary codes and social labels that have similar purposes, which require their own audits and therefore their own sets of processes – it’s too hard to manage› Voluntary codes often contradict each other!› Factory CSR manages receive limited funds and zero staff› Many factories are SMEs who do not have the capacity to handle such demands› Local knowledge on these codes is hard to find Thursday, 30 COMPLIANCE 17 OF 26 August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 18. Factories have a number of problems in being able to implement CSR› Organisational structures are not conducive to CSR activities› Human Resources: if the manager understands and tries to implement CSR activities, its second- line manager who drives action usually does not› Costs are rising in wages, energy and raw materials – why spend more on CSR?› Limited awareness Thursday, 30 COMPLIANCE 18 OF 26 August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 19. Can a factory realistically comply with these codes/labels? › For example: overtime › Demand is extraordinary, there are too many orders to be able to stick to the overtime rules in the voluntary codes › Workers are happy to stay overtime to get more money, they usually come from rural areas and their income sustains the familyThursday, 30 COMPLIANCE 19 OF 26August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman. Image from alfin2200.blogspot.com
  • 20. The situation traps factories in a vicious cycle of fake compliance Give warnings Terminate the contract or and threats to terminate Workers Customers (big brands) Factorylose their refuse to pay for it. After improvements jobs! all, they chose to squeeze profits out outsource to save money of the factory HIGHPRESSURE Factories forced to either lose !! margins or fake their compliance Thursday, 30 COMPLIANCE 20 OF 26 August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 21. And this will continue until…Thursday, 30 COMPLIANCE 21 OF 26August 2012 AUDITS Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman. Image from bullishink.com
  • 22. Those who source the suppliers choose to go beyond monitoring Ensuring Going beyond compliance: compliance: • monitoring • capacity building • auditing • long-term relationship development • building trust • organisational learning • continuous improvementThursday, 30 GOING 22 OF 26August 2012 BEYOND Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 23. This involves developing a close relationship with your supplier› Increase the security of a long-term business relationship in exchange for improved social and environmental conditions› Work with the supplier and take part in improving their workplace› Public-private partnerships Thursday, 30 GOING 23 OF 26 August 2012 BEYOND Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman. Image from iap.esa.int
  • 24. And building on these four foundations or pillars for successFrom Business for Social Responsibility’s “Beyond Monitoring”:1. Buyer internal alignment between environmental and social objectives with purchasing2. Supplier ownership over working and environmental conditions in the workplace3. Empowerment of workers to take a stronger role in exercising their rights4. Public policy frameworks to ensure wider and deeper application of laws 24 of 27 Thursday, 30 GOING 24 OF 26 August 2012 BEYOND Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 25. Unit 7 Course Material, Managing Social and EnvironmentalResponsibility, 2011, SOAS CEDEPVogel, 2005, The Market for VirtueChertow, 2007, Uncovering Industrial SymbiosisWelford & Frost, 2006, Corporate social responsibility in Asian supplychainsREFERENCESThursday, 30 25 OF 26 REFERENCESAugust 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.
  • 26. Unit 7 Course Material, Environmental Auditing and EnvironmentalManagement Systems, 2011, SOAS CEDEPFinkbeiner, Inaba, Tan, Christiansen & Kluppel, 2006, The newinternational standards for life cycle assessment: ISO 14040 and ISO14044REFERENCESThursday, 30 26 OF 26 REFERENCESAugust 2012 Inspired by SOAS CeDEP study programmes. Presentation © 2012 by Darren Willman.