5.1 Stakeholders in the supply chain
In the broadest sense, a ‘stakeholder’ is any person, group or organisation that is impacted in some way by the action or inaction of another. In Activity 4 you will identify the external stakeholders and make a judgement on the impact that they might have on the supply chain.
The most commonly used definition of a stakeholder is: ‘groups and individuals who benefit from or are harmed by, and whose rights are violated or respected by, corporate actions’ (Freeman, 2001, p. 42).
In this section, we are particularly interested in the sustainability of stakeholders that are external to the organisation and whose impact contributes to a smoothly running supply chain. We will focus on:
- suppliers of raw materials, components and services
- governments imposing international and national regulations
- customers and consumers
- society in general
- competitors.
Activity 4: Analysing external stakeholder influence
Complete the following table and consider the potential impact that the sustainability of these five groups of stakeholders could have on the supply chain.
| Stakeholder | Potential impact |
|---|---|
| Supplier | |
| Governments | |
| Customer/consumer | |
| Society | |
| Competitors |
Discussion
Here are some of our thoughts:
| Stakeholder | Potential impact |
|---|---|
| Supplier | Depending on the nature of the product or service, an unsustainable supply could cause inconvenience in sourcing a replacement, raise costs through limited supply, or threaten viability if the product was unique or commercially sensitive. Consider the impact if all of your logistics was carried out by a third party that became unsustainable. |
| Governments | Governments under pressure may react in different ways. There may be tax incentives to attract business, tax levies to protect national interests, or incentives or levies to support initiatives or targets (climate change or emissions). At the time of writing, the tax position of Google in Ireland and the trading impacts of Brexit are yet to be fully established. |
| Customer/consumer | Some of the ethical issues in the previous section could impact on the willingness of customers to trade with an organisation. The sustainability of the market could impact on the sustainability of the supply chain; without demand for the product or service, there is no supply chain. |
| Society | Peer pressure cannot be underestimated, as any parent queuing up at Christmas to buy the latest ‘must have’ toy that is running out of stock will know. Society can have a massive impact on demand, both positive and negative. Society as a whole tends to operate on perceptions rather than reasoned fact. |
| Competitors | It may seem strange to include competitors in the list of stakeholders, but the sustainability of the competition could have a major impact on the organisation. Consider the impact of a major competitor going out of business – this could increase opportunities for the organisation but could also drive up prices, leading customers to seek alternatives that may damage the market in the long term. Conversely, a significant success of a competitor may eat into market share but could also be a catalyst for the development of the market. |
Although the direct impact of the sustainability of external stakeholders is not always obvious, organisations should manage their stakeholder relations or prepare for changes.