Ethical Aspects in Purchasing and Supply Management

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Ethics, integrity and a solid reputation are important to most business owners, who hope to impact the community while keeping customers and stakeholders happy over the long haul. Ethics in purchasing management are vital to creating a company image and reputation that you and your employees can be proud of. When you feel good about how and where your materials come from, you can also feel good about serving the community through your finished products or services.

Ethics in Purchasing and Supplies

When you pride yourself on building solid business practices, it can be easy to assume that you are providing your customers with the very best, but part of providing the best is about ensuring ethics in purchasing and supplies. Ethical problems can come into play at any level of your supply chain and can include things like:

  • Human trafficking: Human trafficking involves the use of force, fraud or coercion in order to obtain labor or commercial sexual acts. The two are often intertwined. 
  • Unfair labor practices: Companies sometimes practice minimal ethical standards by offering the lowest possible legal wages or refusing to address unhealthy working conditions that just barely meet the letter of the law. 
  • Environmental concerns: Some companies or industries ravage the environment and introduce concerns about water toxicity, toxic waste, deforestation and more. 
  • Extortion: Using bribes or threats to obtain money, means or supplies. 
  • Coercion: Coercion happens when people use force or threats to get people to do certain things or behave in a certain way.
  • Favoritism: Favoritism is involved when people choose to partner with family or friends, even when they are not the most qualified, ethical or offer the best value. 

Human Trafficking and the Supply Chain

Depending on the statistics you consult, human trafficking personally affects somewhere between 21 million and 45 million people globally, so could arguably be the most insidious threat to a business' supply chain. This staggering number does not represent the countless family members, friends and communities impacted because their loved ones are exploited through forced labor, bonded labor, sex trafficking, domestic servitude, child labor or forced marriage.

Human trafficking is driven by demand for more products and services at lower and lower prices. As a business owner who wants to provide ethical goods and services, sometimes this means going with sources and supplies that are offered at a higher price point, simply because they are more ethical. Regardless of your industry, becoming more aware of areas in your supply chain potentially impacted by human trafficking can help you better practice good ethics in purchasing and supplies.

How Ethical Issues Hide in the Supply Chain

Practicing ethics in purchasing management can be complicated by the complexity of locating possible issues in your supply chain. For instance, a small garment company might practice intentionally ethical practices by offering a living wage, providing high-quality goods and offering the best customer service. They purchase their fabrics from a supplier who shares similar values, but where did the fabric come from before that?

Was the fabric hand- or machine-woven, who operated those machines, where was the cotton grown, under what conditions and by what workers? Even though the garment company owner practices ethically, ethical issues with suppliers could mean that the cotton was grown and harvested by children, or that it was woven by people experiencing forced factory labor.

Discovering Your Slavery Footprint

One way to gain a basic understanding of how ethics in purchasing and supplies could be impacting your business is to take the slavery footprint quiz from End Slavery Now. Your individual results will help you understand how many people could be negatively impacted by the goods and services you consume. This will give you an idea of how industries like clothing, cosmetics and electronics could be hurting others through poor ethics in purchasing management.

While the Slavery Footprint quiz provides results best applicable to individuals, the same principles hold true for businesses. You can minimize your Slavery Footprint through following End Slavery Now's suggested actions, as well as implementing the following steps toward positive ethics in purchasing and supplies:

  • Choosing to partner with Slave-Free Companies.
  • Buying secondhand when appropriate.
  • Consulting experts and survivors of human trafficking.
  • Modeling your ethics in purchasing and supplies after Slave-Free Companies.
  • Providing all purchasers with current data on human trafficking, environmental concerns and fair labor practices, while giving them recourse when they suspect problems. 
  • Interviewing your suppliers and finding out who they receive materials from. Interview those people and companies, then follow the trail all the way back to where it starts.

Seek Survivor-Leader Input

Building an ethical supply chain takes time and is about progress, not perfection. Even when you ethically source your raw materials, your company likely uses computers, cell phones and other supplies that have questionable ethical backgrounds, but do not let that stop you from trying to improve. Human trafficking consultants are available through organizations like the National Survivor Network and the Rebecca Bender Institute. These are knowledgeable, highly trained professionals who can help to educate your business about human trafficking and identify blind spots you can address over time.

Build Strong Ethical Standards

One way to address possible ethical issues with suppliers is to build an ethical vision for your business, as well as choose ethical management guidelines. Include anyone who has purchasing privileges in this process and put your heads and hearts together to create a tangible plan. Some things you might want to include are as follows:

  • Investigate suppliers and their suppliers as much as possible before signing contracts.
  • Use software like Source Intelligence to identify ethical issues with suppliers.
  • Cultivate awareness of supply chain issues impacting other companies so you can learn from their struggles.
  • Partner with highly-ranked companies on the Know the Chain rankings.
  • Crack down on labor abuses and ethical issues as soon as you are aware of them, even when it is inconvenient.
  • Conduct supply chain audits that provide a map of where your supplies come from and how they are produced. 
  • Stick to supply chain and purchasing standards that meet or exceed your ethical convictions, choices that go beyond what is required by law. 
  • Make corporate social responsibility (CSR) a priority. 
  • Communicate transparently about where your company is with creating an ethical supply chain, where you are going and how you plan to get there. 

Corporate Social Responsibility Initiatives

While your company focuses efforts on building an ethical supply chain, it can also contribute to positive overall change through practicing transparency, education, ethical human resources policies and providing pathways to employment for survivors of human trafficking. Creating a corporate social responsibility (CSR) initiative is a huge part of ensuring your company is making a difference for the better and building a reputation as a business that cares.

Use other businesses to inspire your change. Companies like BIRCHBOX remove funding obstacles for people making a difference in the world, while Target funds community initiatives and the AT&T Foundation funds projects that create opportunities. Your business could fund initiatives and services that help survivors of human trafficking, or even get your hands dirty by offering up volunteer hours to make a personal difference. This will help build your business a reputation for ethical supply purchasing and management and favor with consumers.

References

About the Author

Anne Kinsey is an entrepreneur and business pioneer, who has ranked in the top 1% of the direct sales industry, growing a large team and earning the title of Senior Team Manager during her time with Jamberry. She is the nonprofit founder and executive director of Love Powered Life, as well as a Certified Trauma Recovery Coach, certified HRV biofeedback practitioner and freelance writer who has written for publications like Working Mother, the San Francisco Chronicle, the Houston Chronicle and Our Everyday Life. Anne works from her home office in rural North Carolina, where she resides with her husband and three children.