Procurement Must Target Right Supplier and Corporate Responsibility

In today’s society, more pressure is placed on corporate responsibility than ever before, and therefore the importance of consumer opinion has become paramount to business success.

While part of this will lie under appropriate brand management and involvement in the local community in which the business operates, a large part of consumer trust can be developed or destroyed within the supply chains utilised by the company, or by the occurrence of ‘greater good actions’. These separate out those corporates that exist purely for profit, and those that are for profit but utilise a part of this to help others. Corporate responsibility has an increasing amount of importance within consumer preferences, and has therefore put additional pressures on businesses to foster consumer appeal.

One sees this most prevalently within consumer products. For instance, given the choice, a high percentage of consumers will choose to purchase a good through a company that then uses a specific amount of their profit to support at-risk or under developed communities, i.e. a food company that provides food for at-risk communities has an increased likelihood of being chosen by consumers when compared to similar food items.

The same scenario occurs with consumer preference for services. A consumer will be more likely to contract a service provider if that service provider is known to also provide services free of charge for those at risk or underdeveloped.

Consumers also demand a level of corporate responsibility within company’s supply chain. This is most noticeably seen within recent efforts to eliminate slavery and inhumane working conditions. While recent attention has been on the UK Modern Slavery Act, which requires businesses to increase the transparency within their supply chains as an effort to increase consumer awareness of questionable working conditions, the UK is not the only country in which such transparency is being pushed.

There is a tremendous amount of work ongoing within the International Labour Organisation on increasing the level of corporate responsibility within the supply chain, and many groups, both profit based and non-profit, have produced reports on the need for corporate responsibility to extend to the supply chain. In actuality, the UK government modelled their recent efforts on the California Supply Chain Act. While California’s Attorney General has recently published guidance on compliance with the Supply Chain Act, and has sent letters to those companies that have not yet begun their compliance with the standards, it is important to note that the UK act is broader. The Californian Transparency in Supply Chains Act only applies to retail and manufacturing companies while the UK Modern Slavery Act was made to apply to all businesses supplying either goods or services.

Though not all countries have yet developed standards or legal acts for corporate responsibility, in order to appeal to consumers, taking corporate into account within one’s supply chain is a business imperative.

Businesses must themselves choose at which stage they wish to pre-emptively develop a plan to engender international standards of corporate responsibility within all their actions. As more countries are choosing to examine supply chain standards, it is advisable that businesses consider mapping out current and future supply chains, identifying information about the underlying suppliers, location of operation and other organisational processes – enabling not only the business to identify those areas of greatest risk but also to appeal to consumers through corporate responsibility.

What do you think?

Leave a Comment