4 The social perspective

Figure 6 The social perspective on supply chain sustainability

In this section, we will be looking at the social and ethical aspects of supply chain management, or at least at a selection of them. Rather than presenting you with a comprehensive list of all the issues that you may encounter in this area, we seek to develop your awareness of the type of social issues that may affect your supply chain performance. Specifically, we will discuss the impact of poor performance of organisations with regards to their own staff and suppliers, both direct (tier one) and indirect suppliers (tier two up to the nth tier). Let’s begin our discussion by looking at the subject of ethics.

4.1 Ethics in the supply chain

So what are ethics and what does it mean to behave ethically? This may seem like a strange question, but there are different views on this.

There are multiple theories on ethics but we will touch on just two here: deontological ethics and utilitarian ethics as shown in Figure 7. To fully understand these two views would take dedicated study, but in a nutshell (and with a great degree of simplification) they are defined as follows:

  • Deontologists believe that organisations should follow certain principles, no matter what the consequences. These include honesty and the treatment of people as an end in themselves rather than a tool to be used. Developed by Immanuel Kant in the eighteenth century, this ethical approach focuses on an individual following a moral obligation over a natural instinct, referred to by Kant as ‘the categorical imperative’. The focus of this ethical approach is everyday conduct rather than consequences.
  • Utilitarians believe that the consequences of one’s actions are the important thing, and that organisations should work to deliver the greatest benefit to the greatest number of people. This approach can lead to a dispassionate evaluation of actions, comparing the number of people that benefit with the number of people who might suffer as a result of any actions. The focus is on the ultimate outcome rather than the conduct that leads to the actions.

We will use these two definitions to explore some areas to consider in the supply chain environment.

Figure 7 Two theoretical approaches for explaining ethics

Let’s have a look how these two definitions work in practice.

The UN approach to sustainability

A good example of an approach based on deontology would be the United Nations’ approach. For this institution, the idea of sustainable development is not new. In 1987, it commissioned a report that is still regarded as one of the seminal documents defining the ethical approach to sustainable development.

Commonly referred to as the Brundtland Commission report, the Report of the World Commission on Environment and Development: Our Common Future examined the threats faced by the world and suggested how we should move forward ‘towards sustainable development’.

Achieving social sustainability in the supply chain implies that individual organisations should not only review and assess their own business practices, but also consider the practices of the other members of the supply chain. In the next section, let’s delve deeper into the implications of questionable practices.

You are judged by who you do business with

Based on the utilitarian approach, if a supply chain is to be socially sustainable, all members of the supply chain need to comply with the prevailing expectations of the ultimate customer that this supply chain serves. It is not difficult to find examples of large organisations getting into costly troubles for supplying their customers with what turned out to be tainted goods. Around the turn of the century, sales of leading sportswear brand Nike were severely affected when it was discovered that their suppliers in Cambodia used child labour to produce their garments.

The Nike case has become a classic example in discussions about supply chain ethics ever since. Sadly, it has not led to an eradication of such questionable practices in the supply chain. Similar cases of malpractice continue making headlines. You may remember the 2012 fire in the garment factory of one of Wal-Mart subcontractors that killed 100 workers. Note the comment of the BBC journalist towards the end of the article (BBC News, (2012): ‘Fatal fires are common in Bangladesh’s large garment manufacturing sector. Lax safety standards, poor wiring and overcrowding are blamed for causing several deadly factory fires every year.’ Only six months after the deadly fire, in 2013, another garment factory in Bangladesh made headlines when it collapsed, killing 1000 workers inside who were making garments for, amongst others, the UK retailer Primark – this puts a 2014 Daily Mail article about Primark’s success in a different light. And if you thought that it couldn’t get any worse, what about the 2016 headline ‘Child refugees in Turkey making clothes for UK shops’ (BBC News), which implicated the supply chains of Marks and Spencer and ASOS.

In most instances, the above organisations did not seek out suppliers that were maintaining these deplorable labour practices, yet for a variety of reasons they ended up in the same supply chain. Having a thorough understanding of this perspective is therefore fundamental if you (or your company) would like to minimise the risk.

While very few of you would contemplate introducing the extreme practices observed in the sweatshop in your own organisations, assessing the way that you work with your direct and indirect supply chain partners makes an interesting exercise to see how you (or your organisation) is performing as a social citizen at a less extreme level.

Let’s now move on to the fourth and last perspective, the network perspective.