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.