Daily Archives: February 24, 2008

Integrity Interactive Gets Ethical

Earlier this month, Integrity Interactive announced the formation of a Supplier Ethics Management (SEM) Charter Group with Ryder System, Inc., H. J. Heinz Company, and bioMerieux as founding members. The goal of this initiative, as outlined in the Supply & Demand Chain Executive Article on Combining Forces to Improve Ethics and Compliance in the Extended Supply Chain, is to help develop specific practices and technologies that will ensure the integrity of products built and delivered through extended global supply chains. More specifically, the goal is to develop an online solution to monitor and improve the integrity of the supply chain (as per the Integrity Interactive website).

Now, it’s obvious that today’s supply chains need more ethical monitoring, in addition to more compliance and regulatory monitoring (as evidenced by the many posts on sustainability and corporate social responsibility that you will find on this blog and others), as the following statistics from a compliance survey of Global 2000 companies that were quoted in the original press release are scary enough:

  • 88% do not maintain a platform for identifying, tracking, and communicating with suppliers
  • 78% do not include suppliers in the company’s code of conduct
  • 58% don’t regularly assess compliance risk in the supply chain
  • 56% do not audit supplier compliance with code standards

But ethics goes beyond compliance, and I really have to wonder if an online solution for supply chain monitoring is going to fix the “ethics” problem. I do believe an on-line solution could go a long way to monitoring compliance, and that solutions like Aravo‘s Supplier Information Management (SEM) and Ecovadis‘ for Sustainable Supply Management (SSM) and CSR monitoring are a good start, but how do you monitor a supplier’s ethics without actually visiting its locations and getting to know its personnel.

Let’s face it, just because they don’t employ child labour at the locations they make your merchandise at does not mean they are not opposed to the idea, or that a sister company at another location (owned by the same parent “shell”) doesn’t employ child labor. Just because they check a box saying that their employees don’t work more than 50 hours a week doesn’t mean it doesn’t happen. Just because they say they are an equal opportunity employer, doesn’t mean that they are an equal opportunity employer with respect to the definition you or I would attach to the term. After all, just because they’d hire a woman to stitch garments, that doesn’t mean that they’d ever allow one to be promoted into management.

The point is, in today’s age of global sourcing, your suppliers are half a world away in another country with customs, beliefs, and traditional standards of operations that are likely quite different from what we are used to. And just because they check a box on a web form doesn’t mean that they are being compliant – or that they even understand what you are asking! (And just because they show you a plant that appears to be in compliance the day you show up after you gave them a month’s notice, it doesn’t mean that is how the plant always operates.)

Just like the only way to confirm compliance is to do unannounced plant visits, as far as I’m concerned, the only way to confirm ethics is to do the unannounced plant check and have a few good heart to heart talks over dinner afterward (assuming they pass the plant visit).

What do you think?